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‘Crisis like no other’ will shrink Indonesia’s economy, IMF forecasts
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Jakartans take to the streets around the Hotel Indonesia traffic circle to exercise during Car Free Day (CFD) on Sunday amid the COVID-19 pandemic. Indonesia’s economy is on track for a significant contraction this year as the coronavirus crisis is hitting the global economy harder than previously expected, according to the International Monetary Fund (IMF). (JP/Donny Fernando)
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ndonesia’s economy is on track for a significant contraction this year as the coronavirus crisis has hit the global economy more severely than previously expected, the International Monetary Fund (IMF) has forecast.
The United States-based institution projects that Southeast Asia’s biggest economy will contract by 0.3 percent this year, according to the June update of the World Economic Outlook titled A Crisis Like No Other, An Uncertain Recovery, which was published on Wednesday. The global economy, meanwhile, is expected to shrink by 4.9 percent.
“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the IMF said, highlighting a reversal of progress on poverty reduction and job creation.
“In countries with high shares of informal employment, lockdowns have led to joblessness and abrupt income losses for many of those workers,” the report reads. “The adverse impact on low-income households is acute, imperiling the significant progress made in reducing extreme poverty in the world.”
More than 3.06 million Indonesians have either been laid-off or furloughed as of May 27, according to Manpower Ministry data. The government expects that 5.5 million of the country’s workforce, dominated by those working in the informal sector, will lose their jobs this year following slowing economic activity.
The COVID-19 pandemic has disrupted businesses and factories as people are forced to stay at home to contain the coronavirus spread. Indonesia’s economic growth cooled to 2.97 percent in the first quarter as household spending and investment plunged.
