Hanoi (VNA) - Indonesia's central bank has slashed its forecast for 2021 economic growth to 3.8 percent from a previous forecast of 4.6 percent, based on early assessments of the impact of recent social restrictions.

The largest economy in Southeast Asia has been combating the worst COVID-19 crisis in the region, with the number of new infections and fatalities climbing at an alarming rate, and many hospitals overloaded.

The country has imposed micro-scale public activity restrictions (PPKM) on Java and Bali islands and added more measures in several other regions last week.

The new forecast of Bank Indonesia (BI) was based on an assumption that mobility restrictions could successfully bring down cases after a month, said Governor of BI Perry Warjiyo.

Warjiyo said measures were needed to mitigate the impact of the containment measures on private consumption.

Last week, the Indonesian government lowered its economic growth forecast for 2021 4 to 3.7-4.5 percent from the previous prediction of 5-5.3 percent.

According to Coordinating Minister for Economic Affairs Airlangga Hartarto, Indonesia's economic growth is predicted to drop sharply in the third quarter due to the impact of the PPKM in Java and Bali, which account for 60 percent of the country's GDP./.