Indonesia economy shrinks for fourth straight quarter

Indonesia’s economy shrank for the fourth consecutive quarter in January-March, data showed Wednesday, as the country’s leaders struggle to overcome a recession wrought by the coronavirus pandemic.

The 0.74 percent on-year contraction was a big improvement on the 2.19 percent in the previous three months but slightly worse than expected, with the tourism sector among the worst-affected industries.

However, statistics bureau Suhariyanto told reporters: “It is still negative, but it is much better compared to the previous quarters which shows that the trend of the economic recovery is on track.”

On a quarterly basis, Southeast Asia’s biggest economy contracted 0.96 percent.

Last year the economy shrunk 2.07 percent as it entered its first recession since 1999 during the Asian financial crisis.

Millions of Indonesians have been laid off or furloughed as the country struggled under the weight of the pandemic and in April the central bank revised down its growth outlook for this year to 4.1-5.1 percent, from a previous estimate of 4.8-5.3 percent.

Covid-19 infections have topped 1.6 million with more than 46,000 deaths, putting Indonesia among the worst-hit Asian countries.

The government has unveiled more than $48 billion in stimulus to help offset the impact of the virus, which forced the government to impose wide-ranging, economically-painful containment restrictions.

And while it has kicked off its vaccination drive, just over 20 million of the country’s 270 million people have so far received their first jab.

Analysts warned government restrictions and the slow vaccine rollout will hamper economic recovery efforts.

“Indonesia’s economy struggled to gain any momentum in the first quarter of the year and a failure to contain the virus will hold back the recovery in the quarters ahead,” Gareth Leather, Senior Asia Economist from Capital Economics said.