Indonesia tumbles into first recession for just two decades
05 November, 2020
Indonesia's virus-hit economy contracted in the 3rd quarter, plunging it into its first recession because the archipelago was mired in the Asian financial meltdown more than twenty years ago.
Activity in Southeast Asia's biggest economy slumped 3.49 per cent on-year in July to September, the statistics agency said on Thursday (Nov 5), with tourism, construction and trade among the hardest-hit sectors.
The data marked the second consecutive quarter of contraction after a 5.3 per cent decline in April to June.
Indonesia last suffered a recession in 1999 during a regional currency crisis that helped force the resignation of long-term dictator Suharto significantly less than a year earlier.
However, the depth of the existing decline was easing, the agency said, adding it pointed to more robust figures within the last quarter of the entire year.
"The recovery should continue over the coming months, but it may very well be slow and fitful," Gareth Leather from research house Capital Economics said in a research note after the data were published.
"While Indonesia is quite a distance from bringing the coronavirus in order, the number of new cases does look like easing. This will allow social distancing measures to be relaxed," he added.
Governments all over the world have already been struggling to contain COVID-19 as the deadly respiratory disease forced the shutdown of vast elements of the global economy.
Indonesia's central bank cut interest rates several times this year in a bid to boost the struggling economy, as the government has unveiled a lot more than US$48 billion in stimulus to help offset the impact of the virus, which forced a large-scale shutdown that hammered growth.
Several million Indonesians have already been let go or furloughed as the archipelago, home to nearly 270 million people, battled to support the crisis.
COVID-19 infections are still rising, however, with cases topping 420,000 and a lot more than 14,000 deaths, putting Indonesia among the worst hit Parts of asia.
However, the true scale of the crisis is widely believed to be much bigger in Indonesia, which includes among the world's lowest testing rates.
President Joko Widodo has been widely criticised over his government's handling of the pandemic since it seemed to prioritise the economy.
Boosting gross annual growth above 5 per cent had been a key priority for Widodo in his second term, which started out late last year.
On Monday, the president signed into law a package of pro-business Bills aimed at cutting red tape and drawing more foreign investment as he pushes an infrastructure-focused policy.
But the controversial legislation has sparked mass protests in cities over the nation, as activists warned it could be catastrophic for labour and environmental protections.
Source: www.channelnewsasia.com
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