VOI - Voice of Indonesia | RRI - Radio Republik Indonesia

Economic observer at the Institute for Development of Economics and Finance (Indef) Bima Yudistira has forecast Indonesia's economic growth in the fourth quarter of 2020 to improve, albeit still hovering in the negative zone.

"Negative growth is still recorded in the fourth quarter, with the range probably being minus two percent," Yudistira stated when contacted in Jakarta on Tuesday.

Indonesia's economy shrank by 5.3 percent in the second quarter of 2020, considered to be the deepest contraction.

An improvement to minus 3.49 percent was recorded in the third quarter of 2020.

He expounded that the economic growth projection at the end of 2020 was still negative due to a spike in the number of new COVID-19 cases in Indonesia, even surpassing eight thousand cases on December 3, 2020.

"Despite good news about vaccines, the number of COVID cases in the fourth quarter had still been relatively high and also risen to over eight thousand cases," he noted.

In addition to an increase in the number of cases, economic growth in the fourth quarter was also influenced by a cutback in the year-end long holidays.

Yudistira gauged that economic growth at the end of the year was so far usually supported by the long Christmas and New Year’s holidays, specifically from the tourism and travel or transportation sectors.

The observer believes that the cuts will have an impact on household consumption that is also expected to slow down.

Meanwhile, a positive contribution to bolster the Indonesian economy to improve in the fourth quarter of 2020 is the trade balance that moved into surplus, especially the export performance that improved owing to the rising world oil prices in November 2020.

The increase in world oil prices boosted oil and gas exports by 27 percent as compared to October 2020.

Yudistira stated that it also boosted commodity prices and was supported by economic recovery in Indonesia's export destination countries, including China, Japan, India, and Australia.

"The manufacturing industry is starting to move, indicated by high raw material imports, which rose 13 percent in November, and on a monthly basis, the manufacturing industry has been optimizing production capacity again," he remarked.

With this development, he projects Indonesia's overall economic growth in 2020 to range between minus two and minus 3.5 percent. (Antaranews)