Indonesia’s economy could contract more than expected if the coronavirus pandemic remains uncontrolled, as Southeast Asia’s largest economy faces an “uneven and volatile” economic recovery, according to the World Bank (WB).
The bank’s East Asia and Pacific Economic Update published on September 29 showed that Indonesia’s economy will fall by 1.6 percent this year under the baseline scenario. In June, it had projected zero growth. However, the economy may contract even by 2 percent if the country fails to control the pandemic.
“It is in countries like Indonesia and the Philippines that recovery will be much slower, because they have not succeeded in controlling the disease,” said Aaditya Mattoo, WB Chief Economist for East Asia and the Pacific.
It is expected that theIndonesian economy will recover next year with a growth of between 3 and 4.4 percent, he said.
FebrioKacaribu, head of the fiscal policy office at Indonesia’s finance ministry, stated that in general, the WB forecast is still in line with the latest government assessmentwhich estimates that Indonesia’ economic growth will be in the range of -1.7 to -0.6 percent.”
Previously, the Asian Development Bank (ADB) and the Organisation for Economic Cooperation and Development (OECD) predicted respective contractions of 1 percent and 3.3 percent for theIndonesian economythis year./.