Indonesia Slips Into Recession In Q3

(RTTNews) - Amid the coronavirus pandemic, Indonesia's economy slipped into a recession for the first time since the Asian financial crisis in 1998, data released by the statistics bureau revealed Thursday.

Gross domestic product fell 3.49 percent on a yearly basis in the third quarter after shrinking 5.32 percent in the second quarter. Economists had forecast an annual decline of 3 percent.

Technical recession is defined as two consecutive quarters of negative growth in real GDP.

On a quarterly basis, the economy expanded 5.05 percent, which was slower than economists' expectations of 5.34 percent.

The expenditure-side breakdown showed that government spending grew 9.8 percent annually. Meanwhile, household spending was down 4.04 percent and investment plunged 6.5 percent.

Exports were down 10.8 percent and imports declined sharply by 21.9 percent.

The recovery should continue over the coming months, but it is likely to be slow and fitful as the pandemic is far from being under control, Gareth Leather, an economist at Capital Economics, said.

Fiscal and monetary policy is also likely to remain supportive, Leather said. The economist expects the central bank to ease monetary policy provided there are no further sudden sharp falls in the rupiah.

The bank had reduced the key interest rate four times this year to support the economy.