JAKARTA (Reuters) – Indonesia’s economic growth likely slowed to the weakest in 18 years in the first quarter, but there is probably worse to come during the rest of 2020 due to the impact of the coronavirus pandemic, a Reuters poll found.
The median forecast of 15 analysts in a Reuters poll was for Southeast Asia’s largest economy to expand 4.04% from a year earlier, compared with 4.97% in the previous quarter.
If the forecast is correct, it would by Indonesia’s slowest growth rate since the second quarter of 2002, based on the OECD data.
The forecast was also below both the government’s prediction for growth of between 4.5%-4.7% and the central bank’s for 4.3%.
Widespread travel curbs, shutdowns of schools and businesses as well as falling global trade were expected to hurt Indonesia even further in coming quarters, with the poll’s median for 2020 GDP growth at 2.3%, the lowest in more than two decades, and compared with 5% last year.
The government’s prediction for 2020 growth is also 2.3%.
“Consumption and investment declined although we had only begun social restrictions in mid-March. Meanwhile, tourism had already been affected since February,” Josua Pardede, an economist with Bank Permata, said, listing manufacturing, mining and transportation among the sectors suffering.
Coronavirus infections in Indonesia have surged to more than 10,000, with 792 deaths, in about two months since it confirmed its first cases in early March.
Authorities have sought to cushion the economic impact of the pandemic by rolling out $25 billion economic stimulus that includes corporate tax breaks and subsidies on interest payments for small firms.
The central bank has cut interest rates twice this year, on top of 2019’s four cuts, and injected more than 500 trillion rupiah ($33.73 billion) into the financial system.
Still, Bank Indonesia sees the economy registering nearly flat growth of 0.4% in the April-June quarter, when the country’s COVID-19 task force expects the outbreak to peak. The central bank then seeds growth picking up in the third and fourth quarters.
“Our economic growth projection really depends on the model of how we’re affected by COVID, the impact of COVID on the health sector and how long this is affecting our society,” Finance Minister Sri Mulyani Indrawati told parliament on Thursday.
“Therefore, making a projection today is something that is very risky because nobody knows what will happen,” she added.
(Polling by Tabita Diela and Nilufar Rizki in Jakarta, Richa M. Rebello in Bangalore; Writing by Gayatri Suroyo; Editing by Simon Cameron-Moore)