Bring on the bad tidings

Bring on the bad tidings

The government's zero growth forecast for the economy this
year has not really sunk into people's minds, including,
apparently, the minds of most government officials. Even as the
economy tumbles from bad to worse, no one in the government is
talking about a recession. They are willing to admit that there
is a crisis, but how bad a crisis is something that they prefer
not to discuss.

Yet, looking at the economic indicators and at events that
have unfolded these past few months, we have all the signs of an
economic recession. It is already a recession -- just not in name
-- and a depression is probably just around the corner.

Take the country's economic growth rate, which has averaged 7
percent for the last 30 years, as an example. The economy is not
only slowing down, it is now grinding to a halt. Some analysts
feel that even a zero growth rate is still too optimistic.

In most developed countries, a recession is usually defined as
a static or contracting economy for two consecutive quarters. In
Indonesia, anything less than a 5 percent growth rate is
considered a recession since, using the government's own
estimates, this is the minimum rate needed for the economy to
absorb three million new workers each year. One would hate to
think what a zero or negative growth rate would mean for the
economy, particularly for the unemployment rate, never mind
people's income.

Most government officials have continued to describe the
present situation as purely a monetary crisis. Indeed, the crisis
started with the plummeting of the rupiah's exchange rate and the
crashing down of stock prices. But now the situation has gone way
beyond a monetary crisis since the impact has already been widely
and deeply felt in the real economic sector.

There is also a tendency for officials to continue blaming the
crisis on external factors, particularly on the regional currency
contagion that began in Thailand. These provided convenient
scapegoats for a time. But with Thailand and South Korea well on
their way to recovery while we continue to go downhill, these
officials need to own up to the fact that the problems are
internal.

It does not help that most government officials continue to
adopt a "business as usual" attitude. The lack, or absence, of a
sense of crisis was most apparent when the government, at least
until last week, forecasted a 4 percent growth for 1998. It has
taken the International Monetary Fund to bring the government to
the realization that the outlook is not as rosy as it would like
to think, and to revise the growth projection accordingly to
zero.

A realization and revision alone are not enough. The
government has still not spelled out what zero growth means and
what its consequences are for the economy and for the people.

This denial mode is also prevalent as official statements
continue to be made with the illusion that things are not so bad.
Even the official unemployment figure, perhaps the most important
statistic at a time like this, belies reality. Employment, for
example, is still defined as people working at least one hour in
a week. This definition puts the national unemployment rate at 3
percent.

Some people may argue that publicly announcing bad tidings
could set off panic and further aggravate the crisis. But
concealing bad news, through a denial mode, a business as usual
attitude and euphemisms, would undermine trust and confidence --
and as we have seen -- set off an even bigger panic.