JAKARTA (TheInsiderStories) – Indonesia’ economic growth dropped to 2.97 percent of the total Gross Domestic Product (GDP) in the first quarter (1Q) 2020 compared to the same period of last year, the statistic bureau reported today (05/05). This growth slowed compared to 1Q of 2019 at 5.07 percent and the weakest since 2001.
The highest growth was supported by the financial services and insurance business at 10.67 percent followed by the government consumption expenditure of 3.74 percent. Quarter on quarter basis, Indonesia’ economy experienced contractions of 2.41 percent caused a contraction occurred in several business fields and all expenditure components.
In the 1Q of 2020, the Southeast Asia largest economy was dominated contribution of Java (59.14 percent) and Sumatra (21.40 percent. Then, Kalimantan (8.12 percent), Sulawesi (6.19 percent), Bali and Nusa Tenggara (2.95 percent). While, the lowest contribution was made by provincial groups in Maluku and Papua.
The agency said, this calculation is based on the amount of GDP in the 1Q of 2020 worth of Rp3,922.6 trillion (US$261.50 billion) and based on constant 2010 prices reaching Rp2,703.1 trillion.
Recently, International Monetary Fund (IMF) has warned Indonesia’ economic growth only 0.5 percent in this year caused the impact of COVID-19, the lowest level since 1998. Last January, the agency still looking the Southeast Asia largest economy prospect 4.8 percent of GDP.
Compared to other countries in the region, said the Fund, Indonesia is still fortunate because Thailand’ economy is estimating shrinking to minus 6.7 percent, Singapore drops to minus 4 percent, and Malaysia contraction to 1.7 percent. Thailand’ economy was hit badly because dependence on the tourism sector.
“Developing countries such as China, Indonesia and South Africa have begun rolling out large amounts of fiscal stimulus to help businesses and workers affected by the corona virus pandemic. However, this fiscal attitude still needs to be enlarged if economic slowdown worsens,” said the report.
But, finance minister, Sri Mulyani Indrawati optimistic Indonesia’ economic growth could reached 2.3 percent in this year. She also estimated the nation’ economy stood at 4.9 percent of GDP in 1Q of 2020. But will be very careful on the next quarter, she adds.
“We and BI (Bank Indonesia) predicts that economic growth this year could be in the range of -0.4 to 2.3 percent because household consumption is only 1.6 – 3.2 percent, investment is estimating dropped from 6 percent can be negative, exports are also expected to be negative because imports have increased,” she told media through a video conference on April 1.
Earlier, President Joko Widodo has signed the presidential decree number 1 of 2020 to accommodated the plans The regulations in lieu is needed by the government to readjust the existing bill.
He also proposed, the government regulating the 2020 State Budget law and individual and corporate income tax act to accommodates the government needs to run the economic stimulus during the pandemic.
“The 2020 state budget will surely undergo a major change, especially macro assumption. What we discussed with the parliament was to prepare rules in situations of urgency. That is why the government can propose regulations to replace the 2020 State Budget law,” said the minister.
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