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Keeping economic resilience amid global uncertainty
Every time market mechanisms collapse, government intervention must come to the forefront and work harder.
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President Joko "Jokowki" Widodo gives a speech at the Indonesia Stock Exchange (IDX) opening ceremony on Jan. 3. (Courtesy of IDX/-)
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tatistics Indonesia (BPS) reported last week that the Indonesian economy grew by 3.69 percent year-on-year (YOY) in the last quarter of 2021, from a contraction of 2.07 percent in 2020, and strongly recovered by 5.02 percent on a quarterly basis. Meanwhile, Bank Indonesia (BI) announced that inflation in 2021 rose to 1.87 percent from 1.68 percent in 2020.
The combination of economic growth and the inflation rate pattern is validation that Indonesia's aggregate supply has recovered, and demand has entered the optimism zone. This pattern shows that in 2021, Indonesia's economy returned to productivity as growth was above the inflation rate. Indonesia's economic productivity depends on how the country contains the pandemic shock.
The question now is how to maintain the country's economic resilience? This question is rooted in the essential sources of economic growth.
Almost 2,500 years ago, the great ancient Greek philosophers Socrates, Plato and Aristotle explained the importance of knowledge, value and passion. In my own words, they are intelligence for knowledge, morality for value and mentality for passion.
Every person needs these elements together to enhance their competitiveness. Without one, human competitiveness will always remain below its potential. The higher a population’s competitiveness, the higher the economic growth of its country.
Therefore, the government's fundamental role is to ensure the quality of human knowledge based on education and the health system, strengthening the quality of institutions through ongoing reforms and stimulating the productivity of the people through market mechanisms.
Over the last 100 years, modern economists have mathematically formulated the importance of human capital, integrity and productivity, while as Plato explained, knowledge indicates the quality of human capital, value represents institutional integrity and passion promotes productivity.
