The Effect of COVID-19 on Indonesia's Economic Growth
The Effect of COVID-19 on Indonesia's Economic Growth
Economic development must be carried out in every country for the progress and prosperity of the community. The economy continues to grow despite fluctuations in the world, but the most important thing is economic growth. economic developments, especially in the infrastructure sector in Indonesia, over the last five years.
The concept of the digital economy was first introduced by Don Tapscott in his book “The Digital Economy: Promise and Peril in the Age of Networked Intelligence”. In Tapscott’s book, he states that the digital economy is also called the new economy; it is characterized by the exclusive use of digital information, but the digital economy doesn't just refer to digital markets. The digital economy can also be interpreted as human behavior regarding how to fulfill their unlimited needs by only using our fingers, or the digital economy can also be interpreted as human activities related to production, consumption, and distribution that are used using our fingers. The definition of the digital economy above can also mean that humans do not need to go to the market anymore but only need to open our smartphones and buy directly without the need to go out of the house, and we can get what we need or want.
In the midst of a pandemic that has hit the entire world, growth has decreased or even gone negative in Indonesia. To prevent COVID-19, the Indonesian government is limiting activities, including economic activities. As a result, people are limited in their ability to leave the house, so it can be done online. This activity could be called the digital economy. Indonesia's economic growth during the COVID-19 pandemic has decreased. The matter is government policy to prevent the Corona virus from spreading easily. One of the policies implemented by the government is lockdown. This caused Indonesia's economic growth to decline dramatically because people were restricted from traveling outside the home. Indonesia's economic growth has slowed down due to COVID-19. The Badan Pusat Statistik (BPS) stated that Indonesia's economy slowed down by 2.97%, which occurred in the first quarter of 2021. If we compare it with the fourth quarter of 2020, the Indonesian economy has decreased by 2.41%. Economic growth slowed down along with the weakening purchasing power of the Indonesian people in general. People's purchasing power is a prefix that makes the component used as a measuring tool for economic growth spending.
The impact of Indonesia's weakening economic growth during COVID-19:
Household consumption growth weakened.
In this condition, household consumption reached 2.84%; it slowed down if we compare it with the fourth quarter of 2019, which got 5.02%. Consumption performance also has an impact on economic growth, as household consumption can support more than 50% of the gross domestic product.
Condition of unemployment in Indonesia.
The survey results from the Central Bureau of Statistics stated in 2010 that the unemployment rate in Indonesia was more than 237 million. Indonesia's population has a relationship with economic growth and unemployment. In 2007, Indonesia's population reached 224 million. If we compare the population in 2007 with the population in 2010, we can say that the population has increased. The increase in population can also result in an increasing unemployment rate.
The number of unemployed people is increasing due to an increase in the number of people who cannot enter the limited number of jobs available. Another factor that causes unemployment is the environmental conditions in a country.
With this Corona virus outbreak, the Indonesian economy has been weakened and hampered. Many companies continue to carry out the production process, which cannot be accompanied by income or revenue. Thus, the company cannot cover the pay for each of its staff. The company, in the end, decided to lay off its staff. However, the employees affected by the termination of employment came from the formal and non-formal sectors. Formal sector workers are people who are trying to be assisted by permanent workers, and they are also laborers, employees, and clerks. While non-formal sector workers are those who do business alone, business is assisted by non-permanent laborers, free workers, and unpaid workers.
In addition to its shortcomings, COVID-19 also has a positive impact on the country of Indonesia itself in general. The technological development of the 4.0 Revolution era had a significant effect on the Indonesia economy. These developments can create new business models and economic actors that are very dynamic, with the impact of being able to shift traditional economic practices that be made. The digital economy is considered to be able to answer the challenges of unstable economic development. The Indonesian government is committed to ensuring that community-based economic development becomes a business actor. The number of entrepreneurs will grow to drive the economy and create new jobs.
The impact caused by the digital economy can be positive or negative in terms of the Indonesian economy. The positive impact is that Indonesia's GDP increases every year. The digital economy can increase the contribution of the digital market to GDB and will even increase rapidly, encouraging the growth of young entrepreneurs through start-up businesses.
This means that the Corona virus outbreak has slowed down Indonesia's economic growth because many markets are closed by government regulations, namely lockdowns that hamper the economy, and has resulted in a lot of unemployment in Indonesia because the population is too high but the number of jobs is very small.
References:
https://www.kompasiana.com/arelisa53847/63c381de4addee5cfb168b02/dampak-ekonomi-digital-bagi-perekonomian-indonesia#google_vignette
