Bank Indonesia revises downward 2021 economic growth forecast to 3.8 per cent

A young Rohingya girl sits at a transit camp Sept. 8 after nearly 300 Rohingya migrants came ashore on the beach in Lhokseumawe on the northern coast of Indonesia's Sumatra island. | AFP-JIJI. Sketched by the Pan Pacific Agency.

JAKARTA, Jul 19, 2021, ANTARA. Bank Indonesia (BI) has revised downward its forecast for 2021 national economic growth from 4.1-5.1 percent to 3.8 percent citing the enforcement of emergency public activity restrictions (PPKM), ANTARA reported.

“If the emergency PPKM lasts for one month and lowers COVID-19 cases, well, then the economic growth will decline to around 3.8 percent,” BI Governor Perry Warjiyo said at a working meeting with the budget committee of the House of Representatives (DPR) in Jakarta on Monday.

The emergency PPKM will lower public mobility and consumption, which will eventually affect national economic growth, he observed. However, the government has had to resort to the policy to stem COVID-19 cases, he said.

One of the possible impacts of the emergency PPKM is low household consumption, which should draw further attention considering that public demand has remained low until now, he added.

Low public demand will keep inflation rate under control, most likely below 3 percent this year, he predicted.

“For us, at this moment our efforts are not controlling inflation, but pushing demand and economic growth,” Warjiyo said.

Signs of national economic recovery can be seen from the first- and second-quarter growth, which was driven by fiscal spending and non-construction investment, he added.

Finance Minister Sri Mulyani Indrawati has forecast that national economic growth in 2021 will lie within the range of 3.7-4.5 percent on account of the emergency PPKM enforced in Java and Bali.

“The overall growth for 2021 will lie in the range of 3.7 to 4.5 percent, as the first-quarter growth was recorded at minus 0.7 percent,” she said during a webinar on the mid-year economic outlook here last Wednesday.

The government’s earlier growth projection lay in the range of 4.5 to 5.3 percent before the emergency PPKM was imposed due to a recent spike in COVID-19 cases.

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