Indonesia’s GDP: a slow turnaround

February 5, 2021

JAKARTA -- Indonesia's GDP contracted by 2.19% y/y in Q4 2020, bringing full-year 2020 growth to -2.07%, the first annual decline since the Asian Financial Crisis. Private consumption, investment and exports all continued to record y/y declines, though the pace of contraction has eased.

Looking ahead, says ANZ Bank, economic activity is likely to stay subdued in the near-term as tightened social distancing measures stall the recovery. "We think a return to positive y/y growth will have to wait until Q2, when base effects turn more favourable," ANZ notes in a report on the latest figures.

"The breakdown shows that most indicators are improving. Private consumption, investment, exports and imports all recorded shallower % y/y declines."

The report says that, while Government spending has continued to record positive growth, the pace of increase has slowed. Meanwhile, an inventory drawdown is a drag on headline growth.

"The near-term outlook remains downbeat. The virus situation in Indonesia has continued to deteriorate, which has in turn resulted in re-tightened social distancing measures and downward pressure on mobility."  (ATI).