Indonesia has entered a recession under the impact of the coronavirus for the first time since the Asian financial crisis more than twenty years ago, the national statistics agency said Thursday.
The gross domestic product (GDP) of Southeast Asia’s largest economy fell 3.49% in the third quarter year on year, following a 5.3% decline in the second quarter, two consecutive quarters of contraction that define a recession.
Indonesia experienced its last recession in 1999, following the Asian financial crisis that plunged the country into a severe economic crisis and resulted in the fall of dictator Suharto a year earlier.
The contraction in the third quarter over one year is stronger than that of 3.2% predicted by twenty economists polled by Bloomberg.
But compared to the previous quarter, Indonesia’s GDP rebounded 5.05%, suggesting that the archipelago has passed the worst of the crisis.
The director of the Suhariyanto statistics office noted an improvement in the economic situation and observed “a good trend for the fourth quarter”.
Indonesia, less integrated in world trade than other countries in the region, limited the impact of the economic crisis. By comparison, Singapore saw its GDP collapse by more than 13% in the second quarter.
Like many countries affected by the coronavirus epidemic, Indonesia had to put in place health measures that crippled many businesses and left millions of informal sector workers without income.
Indonesia is the country in Southeast Asia most affected by the coronavirus with more than 420,000 cases detected and 14,000 deaths, statistics which are probably largely underestimated given the low number of tests.
Indonesian President Joko Widodo this week signed the “omnibus law”, a vast package of measures with the ambition to attract more foreign investment.
But unions accuse this text of undermining labor rights, while environmental defenders denounce a relaxation of regulatory constraints that could encourage deforestation.