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World Bank cuts Indonesia’s GDP forecast, saying public health key to recovery
The World Bank has slashed Indonesia's economic growth projection for this year as the government struggles to control the pandemic.
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On high alert: A resident of Tebet, South Jakarta, takes a rapid test in November. The nationwide number of detected COVID-19 cases has passed 500,000. (JP/Seto Wardhana)
T
he World Bank has stressed the importance of public health measures to fight the COVID-19 pandemic and government support for households and businesses as it slashes Indonesia’s economic projection for this year.
The multilateral lender based in Washington, DC, said in its latest Indonesia Economic Prospects report published on Thursday that the country’s improved testing and contact tracing capacity were essential in efforts to reopen the economy. The government also needs to maintain its social assistance and liquidity support, according to the report, because without the aid, 8.5 million people may fall into poverty this year.
“There are reasons to be hopeful for the future, but the road to full recovery is likely to be long and challenging,” World Bank country director Satu Kahkonen said in a virtual press conference on Thursday.
“Strong and well-implemented public health and economic policies are the keys in accelerating and strengthening the recovery.”
The World Bank now expects Indonesia’s gross domestic product (GDP) to shrink by 2.2 percent this year, which compares to a less severe contraction of 1.6 percent projected in the World Bank’s September report on Indonesia, because of a weaker-than-expected recovery in the third quarter.
Indonesia recorded a 3.5 percent year-on-year GDP contraction in the July–September period, sending the country into its first recession since the 1998 Asian financial crisis, as the coronavirus outbreak paralyzed economic activity. The contraction is less severe than the 5.3 percent decline seen in the second quarter.
