The Indonesian economy grew more slowly than expected last year, official data showed yesterday, and officials warned that the nation’s lucrative tourism sector faced a negative impact from a drop in Chinese tourists due to the 2019 novel coronavirus outbreak in China.
Southeast Asia’s biggest economy expanded 5.02 percent, down from the 5.17 percent it posted in the previous year, owing to weakness in exports and softer manufacturing output.
The figures also missed forecasts for a 5.3 percent expansion.
The World Bank in December said that forest fires, which raged across Indonesia last year, would hit the economy to the tune of about US$5.2 billion.
The nation was also grappling with slumping prices for key commodities, such as coal and palm oil, as well as the effects of a China-US trade dispute, which has roiled economies around the world.
“Sustaining growth in a 5.0 percent range in the current environment isn’t easy,” Indonesian Central Statistics Agency head Suhariyanto, who goes by one name, told reporters in Jakarta.
“So I think achieving 5.02 percent during a global economic slowdown is quite good,” he said.
Tourism officials have warned of a drop-off this year, as Indonesia throws up barriers to Chinese visitors over fears of a coronavirus outbreak in that country.
About 2 million Chinese tourists visit Indonesia annually.
“The number of Chinese visitors has dropped significantly since the imposition of travel restrictions,” Ngurah Wijaya, an adviser to Bali Tourism Board and Bali Promotion Board, earlier told Bloomberg News. “And we have no clarity as well on how soon they can or will return.”
Research house Oxford Economics also said the drop-off would take the steam off growth in the first half of this year.
“We expect the economy to be weak in Q1 as exports take a hit due to the coronavirus outbreak and tourism slows,” it said yesterday.
The Indonesian central bank cut interest rates several times last year to counter slowing growth, throwing up a challenge to Indonesian President Joko Widodo, who has pledged to use his second term to energize the economy by cutting red tape and an embarking on an infrastructure blitz.
His government is moving to submit a package of reforms aimed at luring more foreign investment, as well as loosening strict labor laws.
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