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World Bank: Indonesia Economy Is Starting Recovery, but not evenly distributed

World Bank said Indonesia Economy Is Starting Recovery but not evenly distributed
World Bank said Indonesia Economy Is Starting Recovery but not evenly distributed

JAKARTA – The World Bank assesses that Indonesia economy is slowly recovering after some domestic and global economic activities have reopened. However, the pace of recovery has been uneven in various sectors, especially those with high contact intensity.

Acting Chief Economist of the World Bank for Indonesia Ralph van Doorn explained that Indonesia’s economic growth began to improve with a smaller contraction from minus 5.3 percent in the second quarter to minus 3.5 percent in the third quarter.

The recovery was mainly due to partial improvements in consumption, including significant increases in public spending, investment and exports. “But the pace of Indonesia’s economic recovery has not distributed,” he said at the launch of the Indonesia Economic Prospects (IEP) December 2020, Thursday (17/12).

Jobs that were difficult to do, such as construction and manufacturing. Only a small part of the sector shows a recovery.

He said sectors with less contact intensity, such as finance, education, telecommunications and information were better able to survive.

Manufacturing and Mining in Indonesia Helped by Global Trade Recovery

Meanwhile, sectors exposed to foreign demand, such as manufacturing and mining. Were slightly helped by the recovery in global trade and an increase in some commodity prices from their lowest levels in mid-2020.

Doorn warned, the rate of transmission of Covid-19. Which is still high in Indonesia could slow down the pace of economic recovery this year and next. In the December 2020 IEP report. The World Bank projects that Indonesia’s economy will experience a contraction of 2.5 percent in 2020. And positive growth of 3.1 percent in 2021.

This figure is lower than the projection issued by the World Bank in September, which is minus 1.6 percent in 2020. and positive growth of 4.7 percent in 2020. “This is due to tightening

restrictions on mobility in Indonesia and weakening growth and commodity prices at the global level,” said Doorn.

In a very moderate scenario, the World Bank predicts Indonesia’s economy will grow negatively by 2.2 percent in 2020. But lower than the forecast three months ago. Meanwhile, the economy in 2020 to accelerate to a level of 4.4 percent.

This estimate also assumes that increased consumer confidence and household incomes will improve due to a better labor market and adequate social assistance.

 

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