Indonesia expects to see economic recovery in 2020's final quarter

Source: Xinhua | 2020-04-19

Indonesia has claimed that its economy would recover as of the final quarter of this year before the country starts accelerating the growth in 2021 amid the current COVID-19 pandemic.

The country of more than 260 million people has made a number of efforts to reach its expectation including those to enhance business resilience, provide industries with tax incentives, and attract investors to do businesses in Indonesia.

In addition to those measures, Indonesia would also join hands with other countries in efforts to deal with the economic meltdown due to COVID-19 that has been spreading worldwide.

To help the government contain the country's economic slowdown, the central bank, Bank Indonesia, has also taken several steps including an effort to maintain its foreign exchange reserves which are expected to be used for intervention in the financial market so as to avoid rupiah from being burdened during the current difficult time.

Indonesian Finance Minister Sri Mulyani Indrawati said the country's economy would be under extreme pressure in the second and third quarters of 2020 when it would likely grow by minus 2 percent.

However, the minister expressed her hope that Indonesia's economy would begin to recover in the final quarter of this year before the country accelerates the economic growth as of 2021 when the economy is expected to expand between 4.5 and 5.5 percent.

According to her, the government would focus on efforts to raise the resilience of businesses and attract investors to put their capitals in Indonesia's economic development.

In connection with the current COVID-19 pandemic during which medical equipment including face masks and ventilators are badly needed, Indonesia still has an opportunity to invest in the products because the country is considered as a producer of those stuffs.

In such a condition, Indonesia is expected to offer investment on the medical gears to other countries in the belief that the measure could involve businesses in the archipelagic nation so as to make them resilient in the current COVID-19 outbreak.

"Some affected countries remain resilient in the current difficult time," the minister said, adding that Indonesia is expected to invite those countries to invest in the country.

For the time being only manufacturing industry receives tax incentives, and the government will give the same treatment to 11 more industries including those in the sectors of transportation, hotel business and trade which are affected by the COVID-19 pandemic.

In support of the government's measures, the Indonesian central bank, Bank Indonesia, has decided to slash again the minimum reserve requirement for conventional and Islamic banks in a bid to help revive economic growth which has been ravaged by the COVID-19 pandemic.

Governor of Bank Indonesia Perry Warjiyo said on Tuesday that the minimum reserve requirement was cut by 200 basis points for conventional banks and 50 basis points for Islamic banks (sharia banks).

Under the policy which will take effect as of May 1, he said, the banking liquidity will edge up 102 trillion rupiahs (some 6.47 billion U.S. dollars).

On April 1, Bank Indonesia cut the minimum reserve requirement to 50 basis points for banks, which is set to take effect from April 16 until Dec. 31.

The central bank has also been making interventions in the financial market to strengthen Indonesian currency rupiah against foreign currencies.

The Indonesian currency was up by 175 points or 1.12 percent to 15,465 per one U.S. dollar on Friday, compared to 15,640 against the greenback on the previous day.

With such measures, Indonesia's economy is expected to recover by the end of 2020 and start to accelerate its growth in 2021. The country's economy has been hard hit by the COVID-19 which has infected 6,248 people and claimed 535 lives until Saturday.