INDONESIA has seen a huge surge in Covid-19 infections and deaths after reopening its economy gradually since early June, but the country can ill afford to continue imposing a second partial lockdown.
According to The Jakarta Post, Indonesia has seen its Covid-19 cases and deaths double since June as crowds reemerge in virus epicentres like Jakarta.
“Experts have cautioned that the country is at risk of becoming one of the worst-hit (by Covid-19) worldwide, ” reported The Jakarta Post on Tuesday.
Epidemiologist Riris Andono Ahmad from Gadjah Mada University told The Jakarta Post that Indonesia could see “a shortened doubling period for Covid-19 cases, causing the country to become one of the worst hit in the world if there was no intervention.”
Indonesia had recorded 86,521 total cases and 4,143 deaths as of last Sunday, twice the cumulative figure from the previous month.
Its infection cases surpassed Singapore to become the country with the most reported cases in Asean.
On Monday, Indonesia’s confirmed cases surpassed the official toll in China hitting 88,214, with 4,239 dead.
Hotspots in Indonesia have now spread outside of Jakarta to East Java, Central Java, South Sulawesi and South Kalimantan.
Despite the surge in cases, the government and regional administrations have continued to relax social restrictions due to fear of a further slump in the economy.
The central bank Bank Indonesia has forecast that domestic economic growth will contract by 4.8% year-on-year in the second quarter of 2020.
The Finance Ministry expects the country to fall into recession in the third quarter of 2020. Indonesia’s GDP growth fell to a 21-year low in the first quarter, at 2.97% year-on-year.
Last year, the country’s GDP grew 5%.
The government had originally projected the country’s economy to grow by 1% this year, but the worse-than-expected impact from the coronavirus onslaught has sapped optimism.
The World Bank last week warned that the Indonesian economy might contract 2% this year if mobility restrictions were further implemented to contain virus on the back of a deeper contraction in the global economy.
The World Bank estimated that without the government’s assistance, 5.5 million to eight million Indonesians could fall into poverty this year as a result of a 5%-7% decline in household income and unemployment.
In Indonesia, 9.4% of its 273.5 million people (or 25.7 million) live below the national poverty line, according to the Asian Development Bank.
More than 3.06 million Indonesians have either been laid-off or furloughed as of May 27, according to data from the Manpower Ministry.
Facing pressure to strike a balance, the government of President Jokowi Widodo on Monday launched a new task force to tackle both the public health and economic aspects of the pandemic, according to The Jakarta Post.
The National Economic Recovery and Covid-19 Response Team will be led by Coordinating Economic Minister Airlangga Hartato as chairperson and State-Owned Enterprises Minister Erick Thohir as executive chairperson.
“We do not want the public to misinterprete the ‘new normal’ term by returning to their activities freely without complying with public health protocols. At the end of the day, the economy will suffer, ” Erick told a virtual press briefing on Monday.
A key task of the team is to oversee the economic situation and virus developments, including the availability of test kits and vaccine, as well as economic programmes.
The economic recovery task force will map out sectors hit hardest by the pandemic and consult with other ministries and regional administrations for response programmes.
But Enny Sri Hartati, economist at the Institute for Development of Economics and Finance, told The Jakarta Post the main problem hindering Indonesia’s Covid-19 response was miscoordination between ministries and regional administrations.
One case cited: When the Jakarta administration was planning to suspend intercity and interprovincial buses in late March, the then acting transportation minister Luhut Pandjaitan blocked the plan.
Another case: The Industry Ministry issued its own guidelines that allowed factories to open although the Quarantine Law stipulated a suspension of workplace activities.
As a result, very little of the Covid-19 response budget has been spent in Indonesia although there are many programmes to help various sectors of the economy.
But Jokowi believes Indonesia’s Covid-19 situation is still under control.
However, he said “we must not lose control” when he met with all regional heads to discuss how to find a balance between managing the economy and public health last week.
He urged them to accelerate spending from funds allocated, citing reason that the third quarter of this year would determine the turning point of economic recovery.
ING Asia, in a special write-up on Indonesia this week, noted the economy saw contractions in manufacturing and retail sales, fractured export demand and sharp fall in imports.
“We expect GDP to slide into contraction territory by Q2 with growth momentum severely impaired going into 2021.”
ING Asia opined the general slowdown in economic activity will lead to pressure on the fiscal position and added the deficit to GDP ratio could well past the government’s forecast for 6.3% for 2020.
S&P revised its outlook for Indonesia to negative on April 17, highlighting the challenging economic environment brought about by the pandemic and its probable impact on both the fiscal and external position.
But ING Asia said the threat of a ratings downgrade for Indonesia may appear marginal for the time being, given a relatively sound external position with the central bank rebuilding its buffer stock of reserves.
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