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GDP growth forecast slashed to 3.7-4.5% as pandemic worsens
The government has lowered its economic growth forecast in response to the latest measures taken to contain the coronavirus, but businesspeople remain optimistic.
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Finance Minister Sri Mulyani Indrawati, speaking on July 2, 2021, explains changes made to the state budget to finance a government stimulus package ahead of new emergency measures to curb the spread of COVID-19. (Finance Minister/screenshot)
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aking into account mobility restrictions put in place earlier this month, the government has lowered its economic growth forecast for this year to between 3.7 and 4.5 percent, but businesspeople think more is possible.
The new GDP growth projection, issued by the Finance Ministry’s Fiscal Policy Agency, marks a significant change from the initial expectation that growth would rebound this year to a pre-pandemic level in the range of 4.5 to 5.3 percent.
“The recovery trend was actually strengthening until mid-June, when it got hit by the Delta COVID-19 [variant] in the third or fourth week,” Finance Minister Sri Mulyani said in an online discussion on Wednesday.
“And that has begun to show an impact on consumer spending, which has seen a correction, especially for nonessential items like transportation, recreation and clothing,” she added.
The Indonesian Chamber of Commerce and Industry (Kadin) appears less concerned. Newly elected Kadin chairman Arsjad Rasjid noted that some sectors were gaining and could contribute to economic growth this year.
“I want entrepreneurs to think more positively. We should [aim for more than the government’s projection of] 3.7 to 4.5 percent,” Arsjad told the audience in a webinar held by the Institute for Development of Economics and Finance (Indef) on Wednesday.
“If we push the winning industries [sectors that gained during the pandemic], we could achieve higher economic growth,” Arsjad added.
