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Omicron variant casts shadow over Indonesia's economic recovery

The "very high" risk variant of COVID-19 has rekindled concerns of fresh lockdowns and higher emergency relief spending.

Vincent Fabian Thomas (The Jakarta Post)
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Jakarta
Thu, December 2, 2021

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Omicron variant casts shadow over Indonesia's economic recovery A pedestrian walks in front of a restaurant on Jl. Sabang in Central Jakarta on Jan. 8. The government has ordered regional administrations across Java and Bali to reimpose full large-scale social restrictions (PSBB) from Jan. 11 to 25 to curb the spread of COVID-19. (Antara/Dhemas Reviyanto)

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overnment officials are on high alert over the more transmissible Omicron variant of COVID-19, which has rekindled concerns of fresh mobility restrictions and greater relief spending, possibly spoiling Indonesia's economic recovery plans for next year.

So far, officials and economists do not expect the Omicron variant to have a major impact on the Indonesian economy and state budget, citing the country's limited room for emergency response measures and its preparedness after dealing with two COVID-19 waves.

Economists specifically expect the economic impact to be nowhere as bad as 2020, but they also say things could go south, depending on what medical experts learn about the new variant and how other governments respond over the coming months.

President Joko “Jokowi” Widodo instructed his Cabinet on Monday to be on alert over the Omicron variant and to design the 2022 state budget to be "responsive, adaptive and flexible in the face of uncertainty ahead".

“We must be more vigilant with the new Omicron variant present. Mitigations should be prepared as early as possible so it will not disrupt the structural reform and national economic recovery that we are doing,” he said.

The President last month broached a prolonged pandemic as one of several key macroeconomic risks that the government was anticipating in 2022. Other risks included the United States Federal Reserve's tapering, slowing Chinese economic growth and falling commodity prices.

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