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Indonesia’s economy forecast to grow by 0.4 percent in Q2

The Bank Indonesia (BI) on May 6 committed extra efforts to bolster the economy in the context that the country’s economic growth is forecast to weaken 0.4 percent in the second quarter due to coronavirus containment measures.
Indonesia’s economy forecast to grow by 0.4 percent in Q2 ảnh 1BI Governor Perry Warjiyo (Source: Antara)

Jakarta (VNA) – The Bank Indonesia (BI) on May 6 committed extra effortsto bolster the economy in the context that the country’s economic growth isforecast to weaken 0.4 percent in the second quarter due to coronaviruscontainment measures.

BI Governor Perry Warjiyo projected GDPgrowth to pick up slightly to 1.2 percent in the third quarter and 3.1 percentin the fourth quarter, adding that the central bank might revise down itsinitial growth projection of 2.3 percent this full year afterlower-than-expected first quarter growth.

BI’s forecast was based on the assumptionthat the virus outbreak would peak in May until mid-June, with economicactivities starting to stabilise in the third quarter.

Perry told an online news conference thatBI will use all of its instruments to boost the economy. In the short term, itsinterest rate policy will prioritise rupiah stability, although there is roomto lower the rate.

The economy grew 2.97 percent year-on-yearin this year’s first three months as household spending and investment growthslowed amid the COVID-19 outbreak, Statistics Indonesia (BPS) announced on May5. The figure is weaker than the government, central bank and economists’projections of around 4 percent.

The central bank decided to maintain itsbenchmark rate, the seven-day reverse repo rate, at 4.5 percent in April aftertrimming it twice this year to a total of 50 basis points in response to theoutbreak.

The COVID-19 pandemic has affected people’sincome, spending, investment and trade activities but the fiscal stimulus,economic recovery programme, businesses’ restructuring and BI’s support willhelp soften the impacts, Perry said, adding that liquidity injection was moreeffective to support the economy for now compared to lowering the interestrate.

BI has injected a total of 503.8 trillion Rp(33.38 billion USD) in additional liquidity to banks and the financial systemto help cushion the economic impacts of the virus outbreak and to strengthenthe rupiah as part of its quantitative easing measures./.
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