Coronavirus: Indonesia sees first recession since Asian financial crisis

The country’s GDP slumped 3.49 per cent on-year in July-September, with tourism, construction and trade among the hardest-hit sectors

Several million Indonesians have been laid off or furloughed as the archipelago battled to contain the pandemic

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Indonesian street vendors waiting for customers in Jakarta. Photo: AFP

Published: 1:25pm, 5 Nov 2020Updated: 10:43pm, 5 Nov 2020

Indonesia’s virus-hit economy contracted in the third quarter, plunging it into its first recession since the archipelago was mired in the Asian financial crisis more than 20 years ago.

Activity in Southeast Asia’s biggest economy slumped 3.49 per cent on-year in July-September, the statistics agency said on Thursday, with tourism, construction and trade among the hardest-hit sectors.

The data marked the second consecutive quarter of contraction after a 5.3 per cent decline in April-June.

Indonesia last suffered a recession in 1998 during a regional currency crisis that helped force the resignation of long-term dictator Suharto less than a year earlier.

However, the depth of the current decline was easing, the agency said adding it pointed to stronger figures in the last quarter of the year.

“The recovery should continue over the coming months, but it is likely to be slow and fitful,” Gareth Leather from research house Capital Economics said in a research note after the data were published.

“While Indonesia is a long way from bringing the coronavirus under control, the number of new cases does appear to be easing. This will allow social distancing measures to be relaxed,” he added.

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