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Analysts 'expect GDP to dip below 5%' as viral outbreak derails global economy
With the country's top market in a virtual trade lockdown, Indonesia must look to nontraditional destinations to offset economic shock.
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A truck transports a container at the Jakarta International Container Terminal (JICT) in Tanjung Priok, North Jakarta. Analysts expect the impacts from the novel coronavirus outbreak to slow Indonesia's economy to below 5 percent in 2020. (Antara/Dhemas Reviyanto)
T
he Indonesian economy is projected to slow further this year, with the coronavirus epidemic expected to add to global uncertainties and in turn worsen the country’s economic outlook, analysts say.
The analysts estimate that growth would fall below the government’s 5.3 percent target as a result of the outbreak significantly reducing Indonesia's exports to China, one of the country's main trading partners.
Center of Reform on Economics (CORE) director Mohammad Faisal estimated that the economy would decline to 4.9 percent this year from 5.02 percent last year. This was primarily because the coronavirus outbreak that emerged in late December 2019 in Wuhan, China, would increase pressures on a global economy that had been burdened by the prolonged US-China trade war and growing US-Iran tensions.
“In 2019, we experienced a number of unprecedented events like the US-China trade war and US-Iran conflict, but the coronavirus outbreak has left the biggest impact,” Faisal said on Tuesday at a seminar on the outlook of Indonesia's exports in n Jakarta.
Faisal said that even though the mortality rate of the novel coronavirus (2019-nCoV) was estimated at only 2 percent – lower than 10 percent mortality rate of Severe Acute Respiratory Syndrome (SARS) – it had infected more people in a shorter period. He added that a high rate of infection caused a severer impact on the the economy, especially for the tourism industry.
By Wednesday afternoon, the number of confirmed 2019-nCoV infections in China hit 44,653, up 2,015 from the previous day, and the death toll had increased by 97 people to 1,113.
He suggested that Indonesia strengthen domestic investment, adopt import substitution and diversify export markets and commodities to offset the impacts of the fall in exports to China.
