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Yearender 2021: How the Delta wave disrupted Indonesia’s economic recovery
The Delta wave, which peaked in July, disrupted the momentum of Indonesia’s economic recovery as it forced the government to tighten restrictions amid low vaccination rates.
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Blue sky is seen above the usually polluted Jakarta on July 2, 2021, after several days of residents restricting themselves from leaving their homes for fear of contracting the Delta variant of COVID-19 and a day before the implementation of emergency public activity restrictions from July 3 to 20. (AFP/BAY ISMOYO)
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ndonesia’s economy was on track for a somewhat speedy recovery until the Delta-fueled second wave hit between July and August, which prompted the government to tighten mobility curbs to bring down surging cases and deaths.
Official data released over the past year show that the second wave stunted the recovery of gross domestic product (GDP), consumption, factory activity, unemployment and incomes, but little affected fiscal consolidation and the rupiah exchange rate.
Overall, Indonesia's economy was much less affected than last year as worldwide business and consumer activity had better adapted to the pandemic, even though the Delta wave far surpassed the first wave in new cases and deaths.
“The COVID-19 Delta variant hindered Indonesia’s economic recovery in 2021,” Josua Pardede, the chief economist at publicly listed Bank Permata, said on Dec. 23.
“But if we look at the indicators of consumer demand and manufacturing activity, the Delta variant’s impact is relatively limited compared with the start of the pandemic.”
In the second quarter, GDP grew 7.07 percent year-on-year (yoy), showing further signs of recovery from the pandemic-induced recession, despite the base effect, Statistics Indonesia (BPS) data show.
But economic growth slowed to 3.51 percent yoy in the third quarter, disappointing the government expectation of between 4 and 5.4 percent growth, due to emergency curbs.
