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Indonesia’s GDP forecast to recover in Q2 but downside risks loom
The government forecast economic growth to rebound to between 6.9 and 7.8 percent in the April-June period from a year earlier given the low base effect.
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A Muamalat Bank employee uses his smartphone at work at the Muamalat Tower in Jakarta on Sept. 22. Finance Minister Sri Mulyani projects that Indonesia’s economy will contract between 0.6 and 1.7 percent this year due to the COVID-19 pandemic. JP/Seto Wardhana. (JP/Seto Wardhana)
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ndonesia’s economic growth is forecast to reenter positive territory starting in the second quarter this year after posting a smaller contraction in the first, bolstered by the vaccination drive and fiscal support, but pandemic risks still loom.
The government forecasts the country’s gross domestic product (GDP) to rebound to between 6.9 and 7.8 percent year-on-year (yoy) in the April–June period this year, according to Coordinating Economic Minister Airlangga Hartarto.
“The base is pretty low in the second quarter of last year,” Airlangga said in an online press conference on Wednesday. “It is so low that if the GDP at constant prices stays the same as the first-quarter level, it will jump 5.62 percent.”
The forecast follows the recovery trend as reflected in the smaller GDP contractions since the July–September period, when the economy plunged into its first recession in over two decades as it contracted a sharp 3.49 percent yoy, Statistics Indonesia (BPS) data show.
In the January–March period, Indonesia’s GDP contracted 0.74 percent yoy, BPS reported on Monday. The decline was less severe than the 2.19 percent annual contraction seen in the October–December period last year and fell within the government’s forecast range of a contraction of between 1 and 0.1 percent.
Read also: Indonesia's Q1 GDP contracts 0.74%, on track to recovery
“Taking into account the development of various indicators that have continued to improve up to April and the low base effect from the minus 5.32 percent economic growth in the second quarter of 2020, we expect economic growth in the second quarter of 2021 will return to positive territory,” BPS head Suhariyanto said in an online briefing on Monday.
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