Indonesia Economic Prospects, July 2020 : The Long Road to Recovery
The COVID-19 (coronavirus) pandemic and associated containment measures triggered the deepest global recession in eight decades. As many countries implemented lockdowns and travel restrictions, global demand for goods and services plummeted along w...
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| Format: | Report |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/804791594826869284/Indonesia-Economic-Prospects-The-Long-Road-to-Recovery http://hdl.handle.net/10986/34123 |
| Summary: | The COVID-19 (coronavirus) pandemic and
associated containment measures triggered the deepest global
recession in eight decades. As many countries implemented
lockdowns and travel restrictions, global demand for goods
and services plummeted along with tourism flows and
commodity prices; supply chains were disrupted; and
financial market volatility spiked. The Government of
Indonesia also implemented mobility restrictions from
mid-March and then a partial lockdown from April to June,
preventing many firms and shops from operating, and
discouraging many consumers from shopping. Hit by severe
external and domestic shocks, economic activity tumbled.
Real GDP growth slumped from 5.0 percent yoy in Q4 2019 to
3.0 percent in Q1 2020, the lowest quarterly growth since
2001. Private consumption slowed as mobility restrictions
and personal avoidance behavior curbed household
consumption. Investment growth also declined with heightened
uncertainty and lower commodity prices. There was
broad-based slowdown across sectors. Manufacturing,
construction and low value-added service sectors including
transport, storage, hotels and restaurants, sectors that
employ a larger number of workers, all saw a near halving in
their sectoral growth rates from Q4 2019. In contrast,
growth of modern, knowledge-intensive services sectors,
including digital, financial, education and health services
accelerated. The slowdown in domestic demand and the
unexpected growth in some manufactured exports helped narrow
the current account deficit (CAD) to 2.5 percent of GDP in
Q1 2020 from 2.7 percent of GDP in Q4 2019. The goods trade
surplus soared, as some diversion of manufacturing
production from China and higher palm oil prices earlier in
the year propped up export values, while imports contracted
due to lower consumption and, investment and falling oil
prices. With the sudden stop in global travel and transport,
both services exports and imports plunged. |
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