“A drop of 1 percentage point in China’s economic growth will result in a drop of 0.3 to 0.6 percentage points in Indonesia’s [growth],” Finance Minister Sri Mulyani said during a press briefing in Jakarta on Wednesday.

Indonesia’s economic growth rate, which hit a three-year of 4.97 percent in the fourth quarter of 2019, was projected to grow 5.3 percent this year. Sri Mulyani’s estimate meant economic growth may slide to 4.7 percent.

“We are vigilant, but China’s government will have countercyclical measures through fiscal and monetary expansion,” said the minister. Measures taken by China’s government could bolster China’s economic growth in the second quarter.

China is giving tax concessions to companies directly affected by coronavirus disease 2019 (COVID-19), and its central bank set up a special 300 billion yuan relending fund to prop up the economy amid travel warnings and suspended operations at factories and small businesses.

Sri Mulyani said the government had yet to officially revise this year’s economic growth target of 5.3 percent in the state budget, as it was still monitoring global economic growth prospects and China’s economic outlook in for 2020. 

“Analysts’ projections of a 1 to 2 percentage-point drop in China’s economy are still based on certain scenarios, but we are still assessing the outbreak’s impact on the economy.”

Since it emerged in the Chinese city of Wuhan in late December, COVID-19 has killed nearly 2,000 people, including five outside of mainland China. The virus has spread to nearly 30 countries, with more than 70,000 people infected globally.

Several countries, including Singapore, are now undertaking fiscal and monetary easing policies to counter the negative economic impact of the outbreak.

Bahana Sekuritas economist Satria Sambijantoro said Indonesian policymakers could not afford to fall behind the easing curve of Asian countries.

“However, any slowdown is likely to be U-shaped, as China's coronavirus outbreak actually has not caused any deterioration in economic fundamentals in China and Indonesia,” Satria told The Jakarta Post. 

Taiwan plans to spend US$2 billion to help cushion the impact of the new coronavirus on its export-reliant economy, offering loans to small businesses and even vouchers to spend on food at night markets, according to Reuters.

Meanwhile, Singapore on Tuesday announced around $4.5 billion in financial packages to help contain the coronavirus outbreak in the city-state and weather its economic impact, paving the way for its biggest budget deficit in at least 15 years, Reuters reported.

“This means growth will rebound strongly very soon, with global demand for commodities and manufacturing products backloaded in the second half of 2020.”

The outbreak has dealt a blow to Indonesia’s travel industry, with mass cancellation of flights and hotels. The Indonesian Hotel and Restaurant Association (PHRI) recorded at least 20,000 cancellations for Bali since the rise of the new coronavirus in early January.

Tourism and Creative Economy Minister Wishnutama said Indonesia could forgo revenue of up to $2.8 billion from Chinese tourists, whose number reached an average of 2 million travelers a year. Indonesia saw 16.1 million foreign tourist arrivals in 2019, with Chinese visitors contributing 12 percent of all foreign arrivals.

The Indonesian government will provide discounts of up to 30 percent for both foreign and local travelers as more tourists cancel their vacation plans to the country over fears of the outbreak. President Joko “Jokowi” Widodo has said the plan will be relayed to travel companies, airlines and other affected industries.

Sri Mulyani said details of the proposal would be announced soon, adding that it would be discussed first with other ministries, including the Health Ministry and the Tourism and Creative Economy Ministry.

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