Coronavirus Crisis; Indonesia's Economic Growth May Drop below 5%

TEMPO.CO, Jakarta - Mari Elka Pangestu, the Managing Director of Development Policy and Partnership of the World Bank, projected that the coronavirus crisis could drag Indonesia’s economic growth to be under 5 percent, below this year's target of 5.3-percent.

Mari said that if the Chinese economic performance drops by 100 basis per point (bps), Indonesia’s economy could fail 30 bps, adding that the world economists predicted the growth of China’s economy may slow by 100 bps to 300 bps due to the virus.

“To me, [the growth at] under or over 5 percent is not much different. What’s important is we must be lucky that we can maintain it stable at 5 percent. That’s really great amid the current global condition,” said Mari after meeting with President Joko “Jokowi” Widodo at Bogor Presidential Palace, West Java, Tuesday, February 11.

The former tourism and creative economy minister reiterated that the most likely affected sector is tourism. Referred to the Tourism Ministry data, the number of Chinese tourist visits last year amounted to 2 million people with the foreign exchange earnings of US$2.8 billion. By means, the suspension of direct flights from and to China since February 5, 2020, until the unspecified time would correct the foreign exchange earnings from the tourism sector.

Additionally, Mari said that the domestic trade would be hindered, especially those related to exports and imports following the drop in China’s productivity amid the coronavirus outbreak.

Therefore, Mari Elka Pangestu suggested the Indonesian government push for the domestic economy by focusing to boost the people’s purchasing power as the key strategy. Indonesia has one advantage due to its huge domestic market, Mari opined.

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