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Year-end holidays won’t spur consumption if COVID-19 uncontrolled: Economists
The 2020 year-end holiday will not be effective in boosting household spending and the Indonesian economy as a whole as long as the coronavirus pandemic remains uncontrolled, economists say, while the government plans to cut the holiday period short to curb the outbreak.
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Medical workers take blood samples from tourists at the Puncak tourist area in Bogor, West Java, on Oct. 29. (Antara/Yulius Satria Wijaya)
The 2020 year-end holiday will not be effective in boosting household spending and the Indonesian economy as a whole as long as the coronavirus pandemic remains uncontrolled, economists say, while the government plans to cut the holiday period short to curb the outbreak.
The public holiday period will not lift consumption to pre-pandemic levels in the fourth quarter, Center of Reform on Economics (CORE) Indonesia research director Piter Abdullah said, adding that a lack of public optimism about the economy would limit potential economic activity.
“As the upper-middle class are concerned over the virus spread, they intentionally cut back spending and prefer to stay at home,” he told The Jakarta Post on Friday. “As long as they do not have the confidence to make purchase of goods and services, the economy will remain sluggish.”
Upper-middle class consumers contribute around 82 percent to household spending, according to a study published by CORE Indonesia earlier this month.
Indonesia’s economy contracted 3.49 percent year-on-year (yoy) in the third quarter, after falling 5.32 percent in the previous quarter, leading the country to its first recession since the 1998 Asian financial crisis. Household spending, which accounts for more than half of the economy, fell at a steeper rate of 4.04 percent yoy in the third quarter.
President Joko “Jokowi” Widodo recently instructed his subordinates to shorten the year-end holiday to curb COVID-19 transmission following soaring infections detected shortly after several long weekends in recent months.
