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Breaking: Indonesia’s economy shrinks 2.07 percent in 2020
The weak economic recovery reflects sluggish household spending amid large disbursement of government's coronavirus stimulus funds.
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Breaking News (TJP/File)
I
ndonesia’s economy contracted 2.07 percent year-on-year (yoy) in 2020, well within the government’s expectation and the first annual contraction since 1998 Asian financial crisis, as the country continued to struggle with the persisting pandemic, while nearly all gross domestic product (GDP) components fell, Statistics Indonesia (BPS) announced on Friday.
BPS also announced that the economy shrank 2.19 percent yoy in the fourth quarter last year, which showed slowing contraction from the year’s second and third quarter, when the GDP dropped 5.32 percent yoy and 3.49 percent yoy, respectively. The previous contractions led the country to its first recession in two decades.
“This still shows improvement, even though it might not be what we hoped for. We still need to evaluate what’s working, what needs to be strengthened, so that economic growth can meet our expectation,” BPS head Suhariyanto said on a virtual briefing on Friday.
Finance Minister Sri Mulyani Indrawati said in December that the government had projected GDP contraction of between 1.7 percent and 2.2 percent this year, driven by shrinking household spending, which accounts for more than half of Indonesia’s GDP.
It was a downgrade of the initial forecast in September 2020, when the government projected an economic contraction of 0.6 percent to 1.7 percent.
Read also: Govt again revises down 2020 GDP amid year-end surge of COVID-19 cases
At the time, the downgrade was mainly based on the rise in COVID-19 cases ahead of Christmas and New Year’s, as well as tighter restrictions that were projected to impact spending. The government made concerted efforts to ban crowd-pulling events and New Year’s Eve celebrations from Dec. 18 to Jan. 8 to prevent a spike in COVID-19 transmission during the holiday season.
