Virus Hit on Indonesia Worse Than Financial Crisis, Jokowi Says

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The coronavirus pandemic has hit Indonesia harder than the Asian financial crisis more than two decades ago, as the outbreak has spared no sectors of the economy, according to President Joko Widodo.

While damage from the financial crisis in 1998 was largely limited to Indonesia’s banking sector and large conglomerates, the pandemic has battered small and big businesses alike, Jokowi, as the president is commonly known, said in a statement.

Indonesia is on course to post negative growth of 3% to 3.8% in the second quarter, Jokowi said, while the picture for all of 2020 is more muddled. Even as the global economy heads for a contraction , Southeast Asia’s largest economy could either contract or eke out some positive growth.

The situation is “dynamic and changing every week and every month,” Jokowi said.

The deteriorating outlook has pushed Indonesian policy makers into action, with the government announcing stimulus worth almost $50 billion. Bank Indonesia cut rates Thursday and flagged room for further easing.

“Now everything is affected because production is affected, supply is affected and demand is affected,” Jokowi’s office cited the president as telling a group of former generals. Businesses from micro to large size have all been hit, prompting the government to unveil various stimulus and social-safety net programs, he said.

With almost 44,000 confirmed infections, Indonesia has the most Covid-19 cases and fatalities in Southeast Asia. The country has seen a surge in new cases in recent weeks as testing has ramped up, prompting the finance ministry to sharply cut its economic growth forecast for the year, warning that the economy could even shrink.

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