Indonesia’s economic growth eased more than expected in the first quarter as the coronavirus, or Covid-19, outbreak weighed heavily on consumption, investment and tourism, official data showed Tuesday.
Gross domestic product climbed 2.97 percent on a yearly basis in the first quarter, much slower than the 4.97 percent expansion seen in the fourth quarter. Economists had forecast the economy to grow 4.04 percent.
Quarter-on-quarter, GDP shrank 2.41 percent in the first quarter, which was faster than the expected fall of 1.27 percent.
The expenditure-side of GDP showed that household consumption rose only 2.84 percent annually and government spending advanced 3.74 percent in the first quarter.
Investment rose 1.7 percent and exports gained 0.24 percent. Meanwhile, imports fell 2.19 percent.
Earlier, the government had downgraded its growth projection for this year to 2.3 percent and cautioned that the economy could even shrink in a worst case scenario.
Gareth Leather at Capital Economics said Indonesia was later than other countries to lockdown its economy, meaning more of the hit will have fallen in the second quarter. The economist expects a sharp contraction in the three months to June period.
The monetary policy sidelined for the time being, fiscal policy will likely be counted on to support the economy, with the second quarter likely to fall into contraction as Covid-19 cases continue to rise, despite President Jokowi’s partial lockdown measures, Nicholas Mapa, an ING economist added.
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