IMF predicts Indonesian economy growing 0.5 percent this year
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Republika: IMF prediksi ekonomi Indonesia tahun ini tumbuh 0,5 persen
15 April 2020
By: Adinda Pryanka and Nidia Zuraya
Republika.co.id, Washington – The International Monetary Fund (IMF) forecasts that the Indonesian economy can grow 0.5% in 2020. This growth is relatively good for countries in Asia, especially for developing countries.
The economy of Thailand, which is also part of ASEAN-5, is predicted to decline by 6.7%. Meanwhile, the economy of Malaysia has also dropped by 1.7%.
The data was published by IMF through a report titled World Economic Outlook (WEO) April 2020 released on Tuesday (14/4). In the report, IMF predicts that the global economic growth this year will be worse than during the financial crisis from 2008 to 2008, due to the coronavirus pandemic that suppressed economic activities in real and financial sectors.
IMF mentioned that the economy would rebound next year. The Indonesian economy is predicted to grow 8.2%, while the global economy is predicted to grow 5.8%. However, that can only be achieved if the pandemic had passed and economic activities went back to normal in the second half of 2020.
IMF appreciates the fiscal response in Indonesia. The donor institution mentioned that the Indonesian government had provided fiscal support that was in line with the target. “Many markets and developing countries [such as China, Indonesia, and South Africa] have announced that there is significant fiscal support for sectors and employees affected [by coronavirus],“ IMF states in their report.
Moreover, IMF has asked for the fiscal steps to be improved, especially if economic activities would still be limited. Special fiscal stimuli can maintain confidence, boost demand, and prevent further economic slowdown.
Fiscal policies must be developed to protect households and businesses that are affected by the pandemic and to maintain economic relations after the crisis has passed. The fiscal policies must be developed massively, on time, temporary, and on target.
IMF also affirmed that strong multilateral cooperation was important to mitigate the impacts of the Covid-19 pandemic, which could be established by helping countries that are facing financial constraints and countries with limited healthcare system.
Countries need to cooperate to prevent the virus from spreading and to develop a vaccine to cure Covid-19. “Until a medical solution is available, no country is safe from the pandemic as transmission is occurring everywhere else,” as quoted from the IMF report.
For developing Asian countries, IMF forecasts that their economy can grow by 1% in 2020. Despite being lower by 5% compared to the average growth in the last decade, Asia is the only continent with a growing economy in 2020.
The economy of Europe is predicted to decline by 7.5%, while the economy of developing countries in Europe has also declined by 5.2%. Meanwhile, the economy of Sub-Saharan Africa has also declined by 1.6%.
Next article: Investment prospect for 2020: Target more realistic
