Jakarta (VNA) – Fitch Solutions has revised down Indonesia’s economic growth forecastin 2020 as the COVID-19 pandemic places a heavy burden on its state budget andcurrent account and limits Bank Indonesia’s monetary space to support theweakening rupiah.
Accordingly, FitchSolutions revised down its real gross domestic product (GDP) growth forecastfor Indonesia to 4.8 percent this year from 5.1 percent.
The COVID-19outbreak will weigh down private spending and weaken the external sector amiddisruptions to the trade of goods and services, Fitch Solutions said, while thedrop in global oil prices could limit the government’s ability to provide asubstantial stimulus to bolster the economy.
According to thelatest available data, 13 percent of the Indonesian government’s revenue comesdirectly from the commodities sector. Meanwhile, household spending contributesto more than a half of the country’s GDP.
Indonesia’s economyexpanded 5.02 percent last year, down from 5.17 percent in 2018.
Indonesian FinanceMinister Sri Mulyani Indrawati on March 18 projected that the country’seconomic growth might drop to 4.5 to 4.9 percent in the first quarter, withpotential to further plunge in the second quarter, amid weakening economicactivities caused by the spread of the COVID-19.
The government hasannounced two stimulus packages worth trillions of rupiah to cushion theeconomy and support people’s purchasing power. It is preparing a third stimuluspackage that will fund the healthcare system.
Fitch Solutionsexpected Indonesia’s fiscal deficit to widen to 2.8 percent of GDP from theprevious forecast of 2.5 percent, as the government is expected to cut spendinglater this year to keep the deficit within the constitutional limit of 3percent. It also revised up its forecast for Indonesia’s current accountdeficit from 2.6 percent to 3 percent of GDP for 2020.
Indonesia hasannounced 227 confirmed COVID-19 cases, with 19 deaths./.
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