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.