BOGOR (TheInsiderStories) – The new World Bank’ managing director, Mari Elka Pangestu, rated that the coronavirus has the potential to drag Indonesia’ economic growth to less than 5 percent in this year. In the 2020 State Budget, the government is targeting economic growth of 5.3 percent.
She saw, the virus outbreak will make China’ economic growth slow down up to 300 basis points. In this case, he urged the government must encourage the growth from the country itself. The main strategy must be focused on strengthening people’ purchasing power, she adds.
Last week, coordinating minister for economic affairs, Airlangga Hartarto, also said the coronavirus epidemic may knock 0.1 to 0.3 percentage point off Indonesia’ economic growth by hurting tourism and the pharmaceutical sector. The assumption caused China is the biggest trading partner and a major source of direct investment for the nation.
The country imports many pharmaceutical products from China’ Wuhan city, the centre of the outbreak, he said. When chairing a limited meeting on Feb. 4, President Joko Widodo has asked his staff to carefully calculate the impact of implementing the policies adopted by the government regarding this matter.
The reasoned, China became the first export destination country with a market share of approximately 16.6 percent of Indonesia’s total exports. The second world largest economy is also known to be the largest country of origin of imports for Indonesia.
This was also part of the discussion between the President and Pangestu, in his second meeting at the Bogor Presidential Palace, West Java, on Tuesday (01/11).
“If the corona virus still has no definitive predictions what is expected to happen. However, it is certain that the Chinese economy will definitely experience a decline in growth,” said Pangestu after the meeting.
President himself saw the potential for exploiting export market niches in other countries that had previously imported a lot from China. Likewise, this has created momentum for the import substitution industry in the country to increase production and develop further.
“In terms of imports, the supply chain breaking because of the corona virus also means we have to find other sources or sources from within the country. Maybe it will also encourage incentives to increase investment to replace the import needs for the (domestic) industry we need,” said the former minister of tourism.
Apart from this, she hopes that national economic growth can be maintained as it is today. She believes that in the midst of global uncertainty, being able to maintain economic growth rates in the range of five percent is something that is not easy and should be grateful.
by Linda Silaen, Email: firstname.lastname@example.org