BI Forecasts Indonesia’s Economy in Q2 2020 to Contract 4 Percent


Source:— Bank Indonesia (BI) predicts that Indonesia’s economic growth in the second quarter of 2020 will contract quite deep at 4 percent.

BI Governor Perry Warjiyo said the available data showed a decline in economic activity in Indonesia due to the COVID-19 pandemic, especially in April and May 2020.

“This shows that this deep contraction occurs in the second quarter of 2020. Our estimation based on various data shows a contraction of Indonesia’s economy around four percent,” Perry said in Jakarta on Thursday (16/7).

Read: Kadin Projects Indonesia’s Economic Growth at -6 Percent in Q2

However, BI sees a number of indicators that indicate the economic stretch has begun to rise, such as positive developments in retail sales, purchasing manager index (PMI), consumer expectations, and an increase in other various domestic indicators.

In addition, export performance in June 2020 and several commodities such as iron and steel also improved along with the increasing demand from China for infrastructure projects.

“Therefore, we see that the economy will probably improve in the third quarter of 2020,” he remarked.

Meanwhile, Minister of Finance Sri Mulyani projects that Indonesia’s economic growth in the second quarter of 2020 will be negative 4.3 percent. This figure is deeper than the previous projection, which is 3.8 percent.

“So, we expect that in the second quarter, the contraction that I have said here is -3.5 percent to -5.1 percent. The point is -4.3 percent. Deeper than what we said yesterday which was -3.8 percent,” she said.

She remarked that almost all economic sectors experienced a decline ranging from trade, manufacture, mine, and transportation.

“Because people do not travel even though there is still a very little recovery so that the contraction in the transportation and mining sectors contributed to the deeply negative growth in the second quarter,” she highlighted.

She hoped the government could keep up with the economic performance in the third quarter. She was also optimistic that the Indonesian economy will improve.

“But, this turning point is what we want to accelerate, it becomes what the President focuses on,” she said.  (sh/medccom/kompas/detik)