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ADB holds Indonesia's GDP growth forecast at 4.5% amid caution over COVID-19 surge, vaccine delay
The regional bank and other economists concur that a COVID-19 spike over Ramadan and potential delays in the vaccination rollout are key risks to recovery.
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Shopkeepers prepare to open a clothing kiosk on June 15, 2020 at Tanah Abang Market in Central Jakarta. While inflation remained low in March 2021, Statistics Indonesia (BPS) data showed a hike in the price of consumables, which include clothing. JP/Dhoni Setiawan (JP/Dhoni Setiawan)
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he Asian Development Bank (ADB) has held its growth forecast for Indonesia at 4.5 percent this year, on the back of the ongoing vaccination drive and government efforts, and against the potential risk of a resurgence in COVID-19 cases.
After a rebound this year, the bank forecast that the Indonesian economy would return to moderate growth of 5 percent next year. This was in line with the trend expected to unfold across developing Asian economies, with the ADB forecasting average growth of 7.3 percent in 2021 and 5.3 percent in 2022.
“[The] Indonesian economy, we envision, will rebound strongly, reflecting accommodative fiscal and monetary policy position, a pickup in pent-up consumer demand,” ADB chief economist Yasuyuki Sawada said in a virtual press conference on Tuesday.
Statistics Indonesia (BPS) data showed that gross domestic product (GDP) contracted 2.07 percent in 2020, the first annual contraction in over two decades. The figure was only slightly less severe than the ADB forecast of 2.2 percent contraction as a result of the government’s COVID-19 containment measures, which were looser than expected.
The ADB joins the World Bank in maintaining their growth projections for Indonesia, while the Organization for Economic Cooperation and Development (OECD) upgraded its forecast and the International Monetary Fund (IMF) downgraded its forecast.
Read also: IMF lowers Indonesia’s 2021 GDP growth outlook
The regional development bank’s latest forecast falls within the government’s growth range projection of between 4.5 percent and 5.3 percent this year.
