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Indonesia targets V-shaped recovery after disappointing GDP

(Bloomberg) – Indonesia sees a sharp turnaround from this quarter as it assembles more stimulus packages to tackle stubbornly weak domestic demand. Gross domestic product fell 0.74% in the first quarter compared to to a year ago, the statistics office said on Wednesday. , worse than the median estimate of -0.65% in a Bloomberg survey of economists. Nonetheless, that represented an improvement from the 2.19% contraction in the last quarter of 2020.The largest economy in Southeast Asia is expected to resume growth this quarter as the government prepares fiscal and fiscal measures. sale to support the retail sector, said Minister for the Coordination of Economic Affairs Airlangga Hartarto. in a briefing. GDP is expected to grow 6.9% to 7.8% in the second quarter, a pace that would be its fastest since 2008, according to Bloomberg data. “The trend of economic recovery is towards positive growth,” Hartarto said. “The curve is V-shaped, as seen in many other countries.” “Until we restore consumer confidence to revive demand, the risk will be down,” said Enrico Tanuwidjaja, economist at PT Bank UOB Indonesia in Jakarta. He added that he would lower his outlook for the full year due to first quarter numbers, the country’s benchmark stock index slashed the day’s gains to 0.2% after the release of GDP data . The rupee was little changed at 14,435 to the dollar. “The resurgence of the virus earlier this year likely reduced consumption, although there have been signs of a nascent recovery more recently,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp in Singapore. “The Bank of Indonesia will most likely continue to keep its policy rate unchanged, focusing on promoting a more direct transmission of its previous rounds of rate cuts through the banking system.” Main drivers The government recently maintained its outlook of 4.5% -5.3% of GDP growth for 2021, forecasting that consumption around the Eid celebrations in April-May will boost growth in the second quarter. On Tuesday, he cut his forecast for 2022, now expecting growth of 5.2% to 5.8% next year, down from an earlier projection of 5.4% to 6.0% . year over year, but more quarterly contractions this year cannot be ruled out given the higher infection rate of Covid-19 variants now circulating with relatively slow inoculations. We still expect a moderate recovery this year, with growth well below the central bank’s 4.1-5.1% forecast range. Exports and imports topped estimates, while foreign direct investment peaked in three years, mostly in provinces outside of Java’s main growth engine. “The process of economic recovery will differ between provinces and sectors,” said Suhariyanto, the country’s statistics officer. Office said when announcing the GDP data. “Sectors that depend heavily on public mobility, such as transport and accommodation, will take longer to recover.” While factory activity and consumer confidence have grown steadily, core inflation and retail sales remain subdued as moves dampen limits. household spending, which accounts for nearly 60% of the economy Further details from Wednesday’s release: the economy shrank 0.96% from the previous quarter on an unadjusted basis, worse than the drop of 0, 85% forecast by economists in the first quarter, year-on-year, integrates information and communication, + 8.72%; water supply, + 5.49%; health services, + 3.64%; and agriculture, + 2.95% The biggest declines were transport and warehousing, down 13.12%; accommodation, food and drink, -7.26%; business services, -6.1%; and other services, -5.15% Private consumption fell by 2.23%, while public expenditure increased by 2.96% and gross fixed capital formation by 0.23% Exports increased by 6 , 74% from a year ago. Imports increased by 5.27% Vaccine collection Up to 12.7 million Indonesians had been vaccinated by early May, although this is still only a small percentage of the 270 million people in the country. country. Private companies will start vaccinating workers once the government sets a selling price for the vaccines. “The high-frequency mobility data we are tracking from Google suggests that government restrictions and social distancing remain a major drag on activity,” Gareth Leather, Senior Economist for Asia at Capital Economics Maintaining the Restrictions Even though as infections decline, “the government is making a clear compromise to get ahead of the infection curve, as the cost of future lockdowns will be even worse for the economy.” UOB’s Tanuwidjaja said. “This is necessary to achieve a more sustainable recovery in the quarters to come.” (The refoundings lead and add the Minister’s comments in the third and fourth paragraphs.) For more articles like this, please visit us at bloomberg.com’s economic news source. © 2021 Bloomberg LP



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