Adrian Wail Akhlas, Jakarta – Indonesia's gross domestic product (GDP) is expected to shrink by 2 percent at worst or grow by 0.6 percent at best in the fourth quarter of this year, Coordinating Economic Minister Airlangga Hartarto said on Monday.
Southeast Asia's largest economy plunged into recession this year for the first time in two decades as the economy shrank 5.32 percent and 3.49 percent in the second and third quarters, respectively, as a result of the COVID-19 pandemic.
The government has projected that the economy will shrink 0.6 to 1.7 percent annually in 2020.
"If the country can maintain recovery momentum, then we are sure that the economy will get better in the fourth quarter," Airlangga said in prerecorded remarks during a discussion held by media outlet Bisnis Indonesia. "We are seeing a surge in domestic demand and consumer confidence."
Although the country is in a recession, the economy grew by 5.05 percent quarter-on-quarter in the July-September period as large-scale social restrictions (PSBB) were lifted, providing a boost to economic activity despite soaring infections.
The government, Airlangga went on, would continue to balance the economic recovery with pandemic containment efforts, adding that the government's efforts to procure vaccines would support public confidence in the economy.
Indonesia has spent Rp 637.3 billion (US$45 million) to procure a partially tested COVID-19 vaccine from China as the government prepares for mass vaccination program. The country received its first vaccine shipment on Dec. 6. The vaccine's efficacy has yet to be determined.
The government expects to receive another 1.8 million doses in early January 2021 and to receive shipments of raw materials this month to produce a further 15 million doses.
As of Dec. 2, the government had spent 63.3 percent of the Rp 695.2 trillion stimulus budget on the COVID-19 response and economic recovery program. The remaining funds are expected to be spent this month.
Speaking during the same discussion, Finance Minister Sri Mulyani Indrawati warned the public about increased social interactions during the year-end holiday.
She previously said that recent long weekend holidays had prompted spikes in infections weeks later but had provided lower-than-expected boosts to the economy.
"Indonesia should watch out for rising activity during the year-end holiday," she said on Monday. "This must be closely watched so that we do not have to pull the brakes because of rising virus cases."
Indonesia added nearly 100,000 virus cases in less than three weeks, the most in Southeast Asia, and had recorded more than 623,000 cumulative infections as of Monday, with at least 18,000 fatalities, according to official data.
On Dec. 10, the Asian Development Bank (ADB) downgraded its projections for Indonesia's economy this year, following a continued slowdown in economic activity because of the continuing coronavirus outbreak.
It now expects the economy to contract by 2.2 percent this year before growing 4.5 percent in 2021. The ADB previously forecast that the country's economy would shrink 1 percent this year and grow 5.3 percent in 2021, according to an outlook published in September.