Indonesia has officially entered its first recession since the 1998 Asian financial crisis as its economy contracts again in the third quarter of this year, albeit at a slower pace.
Jakarta (VNA) – Indonesia has officially enteredits first recession since the 1998 Asian financial crisis as its economycontracts again in the third quarter of this year, albeit at a slower pace.
Southeast Asia’s largest economy shrank 3.49 percent year-on-yearin the third quarter amid the persistent rise in COVID-19 cases, StatisticsIndonesia (BPS) announced earlier this week.
The figure is worse than the 3 percent contraction forecastby analysts, but is still narrower than the second-quarter contraction of 5.32percent.
As Indonesian regions began to gradually lift thelarge-scale social restrictions (PSBB) and cities began reopening in June,economic activities started stirring again in the third quarter. However,economic activities did not reach pre-coronavirus levels, as the continuingrise in COVID-19 cases held up recovery.
Jakarta even re-imposed the “full” PSBB in September as therise in daily cases strained its health system, before scaling it back down tothe transitional PSBB in mast month.
BPS data shows that household spending, which contributesmore than 50 percent of GDP, fell 4.04 percent – slower than the 5.52 percentcontraction booked in the second quarter – led by a spending slump intransportation, restaurants and hotels.
However, consumer spending in healthcare and educationincreased in the period from July to September while investment shrank 6.48percent – smaller than the 8.61 percent contraction in April-June – asbusinesses cut back sharply on their investment in machinery and otherproducts.
Exports and imports respectively plunged 10.82 percent and21.86 percent, reflecting the downturn in global trade and domestic demand dueto the economic fallout from the pandemic.
However, government expenditure jumped 9.76 percent in thethird quarter to recoup from the second-quarter contraction of 6.9 percent,driven by higher social and capital spending in efforts to fight the impacts ofthe COVID-19.
The Indonesian government has earmarked 695.2 trillion rupiah(47 billion USD) for a stimulus package to revive the economy, which isforecast to shrink between 0.6 percent and 1.7 percent this year./.
State-owned railway operator PT Kereta Api Indonesia (KAI) posted 2.4 trillion IDR (163.6 million USD) loss between January and September, a drastic turn-around from the 1.5 trillion IDR profit booked during the same time last year, as the COVID-19 pandemic continues to put pressure on travel demand.
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Agriculture was the only key sector that contributed to Indonesia’s growth in the third quarter of 2020, given the overall economy contracting 3.49 percent on-year, according to Indonesia’s Central Statistics Agency (BPS).
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Illustrative photo. (Source: MarketScreener) 
