The International Monetary Fund (IMF) has predicted that global economy will rebound by 2021 only if every country could take appropriate measures to prevent the economic slowdown.
“The IMF has projected that almost all countries will experience ‘fixed recovery’ in 2021. That is certainly a quite optimistic outlook about the ability of world economies to post growth in the wake of the COVID-19 pandemic,” Minister of Finance Sri Mulyani has said.
Citing data from the economic activities in various countries, Sri Mulyani said there has been a sharp decline in growth particularly in the manufacturing and services sectors.
However, the timing of the decline, she said is different in each country, depending on whenthe virus started spreading and the ability of the country to speed up measures to tackle the economic impacts.
“Data shows that manufacturing and service sectors in all countries, without exception, will be highly affected by the pandemic. With that being said, unemployment rate is also increasing,” Sri Mulyani said, adding that the pandemic leaves a very broad and deep socio-economic problem and governments must design the right policies to handle it.
The fast-spreading coronavirus, which has infected more than 2 million people globally, has led authorities worldwide to announce massive lockdown. Governments and central banks around the world have also stepped in with measures to help businesses and households survive the crisis.
Meanwhile, the Government is preparing steps to anticipate economic slowdown following the implementation of large-scale social restrictions (PSBB) in various regions.
According to Minister of Finance Sri Mulyani, the restrictions order has pushed the community and business sectors to the edge as their income has drastically dropped, forcing them to even shut their business for an uncertain period of time.
The Minister also explained that the Government must take measures to prevent deeper impacts on the national economy, one of them is by providing tax incentives for both individuals and companies.
Sri Mulyani pointed out that the state revenue from tax has dropped significantly. For example, personal income tax growth this year is recorded at only 4.94%, far below last year’s growth which recorded at 14.7%, she added.
The import and business entities income tax have also dropped due to the decline on import and economic activities, the Minister added.
Domestic value-added tax (VAT), which serves as the biggest contributor for the state revenue, has reported a slight increase by 10.2% for January-February period.
However, the figure may decline in the following period caused by decline in the public economic activities starting March, she added.
The former World Bank managing director noted that import VAT has also reported a decline of -8.7% or Rp37 trillion.
Economic pressure in various sectors has given an initial warning for the Government to review the financial health of companies. Sri Mulyani further said that the Government will then review sectors mostly affected by the restrictions and will provide with several tax incentives accordingly. (Source: setkab.go.id)