As coronavirus began to attack Indonesia in 2001, the country’s Q1 economic growth has been the weakest since 2001. Economists expect that the condition will worsen considering the far-from-over COVID-19 cases in the country.
Gross domestic product (GDP) rose 2.97% year-on-year (yoy) according to Statistics Indonesia (BPS). Despite everything, the growth is weaker than the around 4% projection by the government, central bank, and economists such as of Bloomberg.
Indonesia, which witnessed its first coronavirus case in early March, has been closing numerous business activities since the end of March. From that point onward, household spending and investment growth slowed.
Household spending, which accounts for more than a half of the GDP, only grew by 2.84% in January-March this year. Accordingly, the growth is far weaker than the 5.01% growth in the first quarter of 2019.
Additionally, investment, the country’s second biggest contributor to the GDP, performed worse than the household spending. It only grew by 1.7%, significantly lower than of last year’s equivalence, 5.03%.
Also Read: Indonesia Manufacturing Activities Lowest in Asia
Coronavirus Lockdown in Indonesia Dampens Its Economic Growth
Indonesia has conducted measures to contain the pandemic transmission by implementing a large-scale social restriction in numerous cities and provinces. Ever since, the economy has grown sluggishly.
Large-scale social restrictions have forced businesses in more than four provinces and 22 regencies/cities to temporarily halt operations. Containment measures require people to stay at home, causing unemployment rates to increase exponentially.
Economists in the country predict that the country may potentially experience a slightly worse economic growth in the Q2. They, furthermore, foresee that the nation might go into another financial crisis such as what happened during 1997-1998 Asia financial crisis.
“We are heading into the weakest growth since the 1998-1999 Asian financial crisis,” said Fithra Faisal, an economist from University of Indonesia.
“High uncertainty about when the COVID-19 pandemic will completely end could drag down the full-year figure to below 2 percent,” Mandiri Bank economist Andry Asmoro explained.
Also Read: Unemployment Possibly Rises as Coronavirus Strikes Indonesia
