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Indonesia’s annual GDP set to contract for first time since 1998
The government has revised its gross domestic product (GDP) outlook down to an annual contraction of between 0.6 percent and 1.7 percent.
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A woman walks past closed stores at Pasar Baru market in Jakarta on April 1. (Antara/Akbar Nugroho Gumay)
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ndonesia’s annual gross domestic product (GDP) is set to contract for the first time since the 1998 Asian financial crisis as the government struggles to control the COVID-19 pandemic and contain its economic fallout.
Finance Minister Sri Mulyani Indrawati said the government had revised its gross domestic product (GDP) outlook down to an annual contraction of between 0.6 percent and 1.7 percent as the uncertainty surrounding the pandemic had taken a significant toll on consumption and business investment.
The country’s economy shrank by 13.13 percent in 1998 before rebounding to 0.79 percent growth the next year.
“Several indicators of economic activity show that the economic recovery is still at a very early stage and remains very fragile,” Sri Mulyani told reporters during a virtual press conference on Tuesday. “We will continue to use the state budget to minimize the fallout of the pandemic, but it must be coupled with recovery in consumption and investment for the economy to fully recover.”
The rupiah had fallen 0.58 percent to Rp 14,785 against the United States dollar as of 3 p.m. Jakarta time on Tuesday, following the government’s announcement. The Jakarta Composite Index (JCI), a measure of the Indonesia Stock Exchange (IDX), fell 1.31 percent during the trading day.
The government previously expected the economy to shrink by 1.1 percent at worst or grow by 0.2 percent at best, but several indicators, including retail sales, investment and the consumer confidence index, pointed to a slower economic recovery from the second quarter contraction of 5.32 percent. The country's economy grew 5 percent last year.
