Indonesia’s economy contracted in the third quarter, plunging it into its first recession since the archipelago was mired in the Asian financial crisis more than 20 years ago.
Activity in Southeast Asia’s biggest economy in the July-to-September period slumped 3.49 percent from a year earlier, Statistics Indonesia said yesterday, with tourism, construction and trade among the hardest-hit sectors.
The data marked the second consecutive quarter of contraction after a 5.3 percent decline in the April-to-June period.
Photo: AFP
However, the depth of the current decline was easing, Statistics Indonesia said.
The economy “continues showing a contraction year-over-year, but the quarter-on-quarter recovery was quite strong,” said Anwita Basu, head of Asia Country Risk at Fitch Solutions in Singapore, highlighting a gradual pickup in manufacturing. “Some government efforts to continue with public works are reflected in that.”
Indonesia’s economy was also in better shape than two decades ago, with once-troubled commercial banks now stronger and ample foreign currency reserves at the central bank, Basu said.
Governments around the world have been struggling to contain the COVID-19 pandemic, which has forced the shutdown of vast parts of the global economy.
Bank Indonesia cut interest rates several times this year in a bid to boost the struggling economy, while the Indonesian government has unveiled more than US$48 billion in stimulus to help offset the impact a large-scale shutdown amid the pandemic that hammered growth.
Several million Indonesians have been laid off or furloughed as the vast country, home to nearly 270 million people, has battled to contain the virus.
Indonesian President Joko Widodo has been widely criticized over his government’s handling of the pandemic, as it appeared to prioritize the economy.
Boosting annual growth above 5 percent had been a key priority for Widodo in his second term, which began late last year.
On Monday, the president signed into law a package of bills aimed at cutting red tape and drawing more foreign investment as he pushes an infrastructure-focused policy.
However, the legislation has sparked mass protests in cities across the nation, as critics say that it would be catastrophic for labor and environmental protections.
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