Indonesian Economy Under Pressure in Q1, Bad Omen for GDP Growth in Remainder of 2020
On 5 May 2020 Statistics Indonesia (Badan Pusat Statistik, BPS), a non-departmental government agency, released the first quarter gross domestic product (GDP) data of Indonesia for the year 2020. These data were highly anticipated as policymakers, analysts, and stakeholders are particularly interested in finding out to what extent damage has been done to the Indonesian economy by the self-imposed restrictions.
These restrictions (on social behavior and on business activities) were imposed by the central and regional governments in the context of curtailing the further spread of the novel coronavirus (COVID-19) across Indonesia. What is certain, is that these restrictions have a frightful effect on the economy. We already saw this in the April 2020 edition when we mentioned that the economy of China shrank by a whopping 6.8 percent year-on-year (y/y) in Q1-2020. This contraction can be fully attributed to the self-imposed restrictions in the context of the COVID-19 outbreak. Meanwhile, for Indonesia, China’s Q1-2020 economic data give a glimpse into the future.
The difference between China and Indonesia is that China was the first epicenter of the COVID-19 outbreak. The virus started spreading in China at the end of 2019 and subsequently peaked in Q1-2020. As a consequence, the restrictions (lockdowns in several parts of China) also peaked in Q1-2020. Indonesia, on the other hand, only reported its first two confirmed COVID-19 cases at the start of March 2020, and it would take until the second week of March 2020 before ‘non-essential travel’ was discouraged and social distancing was encouraged. But the real and big restrictions in Indonesia only started in April 2020 (which is part of Q2-2020).
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Poll Indonesia Investments:
According to you at what pace will the Indonesian economy grow in 2020?
Voting possible: -
Results
- Lower than 0.0% (26.8%)
- Higher than 2.0% (17.9%)
- 0.5% - 1.0% (15.9%)
- 0.0% - 0.5% (15.8%)
- 1.0% - 1.5% (11.8%)
- 1.5% - 2.0% (11.8%)
Total amount of votes: 1025