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Property, construction, cars to lead Indonesian recovery in 2021: Fitch
Buoyed by favorable government and central bank policies, Fitch Ratings forecasts recovery this year for the three hardest-hit industries of 2020: property, construction and automotive.
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A row of newly built houses stand in a housing complex in this file photo. Indonesia's property sector was one of the hardest-hit by last year's pandemic-induced slump, along with the construction and automotive industries, and is thus forecast to recover in 2021, says Fitch Ratings. (kompas.com/file)
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ast year’s hardest-hit sectors of property, construction and automotive are expected to lead Indonesia’s recovery this year as they bounce back from the pandemic-induced slump on strong fiscal incentives, says Fitch Ratings.
Director Olly Prayudi and associate director Salman Alamsyah of the global credit rating agency said the three sectors could see improvements this year, although not to pre-pandemic levels just yet.
“The sectors that will recover are those that took the hardest hit last year,” Salman told The Jakarta Post in a video interview on Monday. “Last year, we made the most downgrade in the construction and property sectors, aside from the textile sector.”
With the COVID-19 crisis battering companies in liquidity and profitability, Fitch made 53 downgrades last year, the majority during the second and third quarters when Indonesia imposed strict mobility restrictions.
“But the recovery will depend on the company itself,” Salman added.
“In the property sector for example, it may favor developers with a recognized brand and affordable landed houses worth less than Rp 1.5 billion [US$104.3 million].”
The Indonesian economy showed slight improvement in the fourth quarter of 2020, when it recorded 2.19 percent contraction on an annual basis after the government eased mobility restrictions. The figure was less severe than the 3.49 percent annual contraction recorded in the third quarter.
