JAKARTA (Reuters) – Indonesia’s economy likely posted the biggest contraction in more than two decades in the second quarter, as measures taken to combat the coronavirus pandemic hit most sectors, a Reuters poll showed on Monday.
The median forecast of 20 analysts in the poll was for Southeast Asia’s largest economy to post a contraction of 4.61% from a year ago, after growing 2.97% in the first quarter.
It would be the weakest figure since the first quarter of 1999, according to OECD data, and close to the government’s forecast for a 4.30% contraction and the central bank’s estimate of a 4% to 4.80% contraction.
The large-scale social restrictions put in place across Indonesia to contain the virus outbreak appear to have hit most components of economic activity.
“The overall deterioration in Q2 growth looks to have been broad-based,” Nomura said in a note, citing weaker sales of consumer-related goods, soft manufacturing productivity, low mining activity, moderating credit growth and a drop in tourism.
Nomura forecast Indonesia’s economy had contracted by 6.1% in the second quarter.
“There are signs that suggest Indonesia’s economy is past its weakest point, but with the domestic outbreak not under control yet, economic activity is likely to remain under pressure,” ANZ economists said in a note, noting government spending picked up only slightly and would not be able to offset other weaknesses.
Indonesia reported its first novel coronavirus infections in early March, though only started bringing in significant restrictions in April.
Since then the number of confirmed cases has topped 113,000 with more than 5,300 deaths, and the caseload accelerated in July.
Six analysts who shared their full-year growth forecast predicted Indonesia’s economy could contract by 0.8% in 2020, compared to 5.02% expansion in 2019.
Indonesia’s finance ministry expects flat economic growth or a slight contraction in 2020.
(Polling by Nilufar Rizki in Jakarta and Shaloo Shrivastava in Bengaluru; Writing by Tabita Diela; Editing by Fransiska Nangoy and Ed Davies)