BI Projects Indonesia's Economy To Weak In The First Quarter Of 2020 Due To COVID-19

Bank Indonesia press conference. (Didi Kurniawan / VOI)

JAKARTA - Governor of Bank Indonesia (BI) Perry Warjiyo projected that the economy in the first quarter of 2020 would only grow in the range of 4.9 percent, due to global conditions affected by the spread of the new corona virus or COVID-19 outbreak.

"The occurrence of COVID-19 is expected to put pressure on China's economy and hinder the sustainability of global economic recovery at least in the first quarter of 2020," said Perry Warjiyo in Jakarta, Thursday, February 20.

Perry Warjiyo said the economic growth forecast below five percent took into account a change in optimism in global financial markets after the coronavirus broke out in January 2020.

According to him, the spread of the corona virus could affect the Indonesian economy through tourism, trade and investment channels. From the tourism sector, the potential for foreign exchange loss could reach US $ 1.3 billion because the corona virus has reduced the number of tourist arrivals from China.

"The scenario we see is that there is an impact on flight closures for two months and a decrease in foreign tourists for six months," he said.

From the trade sector, logistical disruptions and distribution of exports and imports could eliminate a total of US $ 1 billion in revenue.

In the short term, investment performance will also be affected due to delays in the inflow of investment of up to US $ 0.4 billion.

"The prevention of COVID-19 needs to be closely monitored because it can affect the prospects for economic growth, trade volume, commodity prices and movement of capital flows," he said.

However, Perry believes that the economy will improve in the third and fourth quarters of 2020 in line with accommodative monetary policy and the stimulus program prepared by the government.

Therefore, Bank Indonesia estimates economic growth in 2020 in the range of 5.0 percent-5.4 percent, although this projection is a downward revision from 5.1 percent-5.5 percent.

"Bank Indonesia will continue to strengthen coordination with the government and related authorities in order to strengthen the sources, structure and speed of economic growth, including encouraging investment through infrastructure projects and the implementation of the Job Creation and Taxation Bill," said Perry Warjiyo.