For the first time in two decades, Indonesia has been hit by recession due to the coronavirus pandemic-induced economic crisis. Southeast Asia’s largest economy’s real gross domestic product (GDP) fell by 3.49 percent in the three months ended September from a year earlier, according to the latest statistics. The slowdown follows a 5.32 percent contraction in the previous quarter.
Two consecutive quarters of negative growth imply a recession. President Joko Widodo had said earlier that he expected third-quarter GDP to contract by more than 3 percent.
Since the Asian financial crisis of the late 1990s, the country had recorded five consecutive quarters of negative GDP growth from the first quarter of 1998 till the first quarter of 1999, according to data from the Organisation for Economic Cooperation and Development (OECD).
Household consumption, which makes up over half of Indonesia’s GDP, contracted by 4.04 per cent year on year (YoY), after a steeper 5.52 per cent fall in the previous quarter. On a quarterly basis, Indonesia’s GDP grew by 5.05 per cent in the July-September period, recovering from a 4.19 per cent contraction.
Economists had initially forecast a stronger recovery in the three months ended September, but had to revise estimates after the country tightened restrictions as COVID-19 cases increased. Finance minister Sri Mulyani Indrawati recently said “the worst is over” for Indonesia’s economy, according to media reports from the country.
The country has also witnessed protests on the controversial omnibus law, which the president signed into force recently. The law seeks to reduce red tape to increase investment. While Widodo sees the law as crucial to reigniting economic growth and jobs, labor unions, students, and Islamic organizations have raised concerns about the law, which they say damages workers’ rights.
As of August, more than 2 million people have lost their jobs in the country because of the pandemic.
This article originally appeared in Fibre2Fashion