Indonesia sees first recession in 2 decades as COVID-19 spreads

Pandemic hits consumption and business activity, costing millions of jobs and gross domestic product shrinks

JAKARTA

Indonesia suffered its first recession in over two decades as the COVID-19 pandemic hit consumption and business activity, costing millions of jobs, the statistics bureau said on Thursday.

Gross domestic product (GDP) shrank by a slightly more than expected 3.49% year-on-year as household consumption and investment fell in the third quarter, official data showed. Economists in a Reuters poll had expected GDP to decline 3% after a 5.32% contraction in the second quarter.

Finance Minister Sri Mulyani Indrawati told a news conference the “the worst is over” pointing to a sharp rebound in quarterly GDP in the July-September period.

But a separate statistics bureau survey showed some 2.6 million people had lost jobs in the year to August due to COVID-19, pushing the unemployment rate to a nine-year high of 7.07%.

A 9.8% rise in government spending helped soften the blow, but economists called on more stimulus to lit the economy.

“The government will focus on further accelerating economic recovery and returning to positive economic growth,” said Sri Mulyani, adding authorities would boost spending in the fourth quarter. The rupiah and the main stock index briefly pared gains after the data.