Observer Prediction: Indonesia's Economy Will Be Eroded By 0.09 Percent Due To COVID-19

Jakarta city. (Photo: Unsplash)

JAKARTA - Economic Observer at the University of Indonesia (UI) Fithra Faisal Hastiadi predicts that the outbreak of the new corona virus or COVID-19 has the potential to reduce China's economy by one percent. So, he said, it would have an impact on the Indonesian economy by 0.09 percent.

Fithra said that every one percent of economic growth in China will affect the Indonesian economy by at least 0.09 percent and a maximum of 0.1 percent to 0.15 percent.

"Yes, that much (0.09 percent). "Every one percent of economic growth in China will affect the Indonesian economy by 0.09 percent or a maximum of 0.1 percent to 0.15 percent," he said in Jakarta, Friday, February 21.

Fithra said that there is indeed a potential for China's economy to decline by more than one percent but only about 20 percent, so that the chance to decline one percent is greater.

"So the possibility of China going down by more than one percent is only 20 percent, so there is a greater chance of it happening by one percent," he said.

Fithra stated that the potential for economic decline in Indonesia was 0.09 percent because the corona virus was classified as insignificant when compared to the possibility of a decline in the economy of other countries due to the outbreak.

"It's big, but compared to Vietnam, Thailand and Singapore, it's bigger because their transactions with China are also bigger than Indonesia and China," he said.

He said this happened because the Indonesian economy was more dependent on domestic factors, so that if there was an external turmoil, the impact would not be that big.

"For the time being, the characteristics of the Indonesian economy are indeed external, but not as big as the domestic ones," he said.

He said that if there is a problem from the domestic side, it will affect Indonesia for up to seven months, while external problems will only affect around 2-3 months.

Fithra also admitted that he was optimistic that China's economy would revive again by reflecting on the SARS case which hit in 2003 and caused a decline, but in the end was able to record a growth of 14 percent.

"Even though he is slowing down, he remains solid and still becomes world victory and the world's hope. I think this is just a momentary shock because if we look to the future it will be more prospective, ”he said.

Not only that, he said patients who had started to recover from the corona virus were also a positive signal to the world that this case would end soon so that economic activity would return to normal.

"We see that many have recovered, so we are quite optimistic that in the future it will not drop more than one percent," he said.

For information as of Thursday, February 20, COVID-19 has infected 75,727 people in 26 countries, of which 74,578 occurred in mainland China with a total of 2,129 people died and 16,526 people were declared cured of COVID-19 after undergoing treatment.

Meanwhile the Governor of Bank Indonesia Perry Warjiyo projected that the economy in the first quarter of 2020 would only grow in the range of 4.9 percent due to the impact of global conditions which were affected by the spread of the corona virus outbreak.

"The occurrence of COVID-19 is estimated to put pressure on the Chinese economy and hinder the sustainability of global economic recovery at least in the first quarter of 2020," said Perry.