Why Is the OECD Pessimistic on the Indonesian Economy?

Summary

The Organization for Economic Co-operation and Development (OECD) slashed its projection for Indonesia’s economy this year from minus 2.8 percent to minus 3.3 percent. In contrast, the OECD predicted that the global economy would be better than the initial estimate at minus six percent to negative 4.5 percent. Based on the OECD report, the global economic projections will improve following the economic recovery of several countries, such as the United States (US) and China, which exceeded expectations in the first half of this year. The response of governments in various countries to the pandemic was also quite massive.

However, OECD also detected several factors that could erode the momentum for economic recovery. “Social restrictions re-imposed in several countries to deal with virus transmission tend to slow down economic growth,” wrote OECD in its official statement on Thursday (9/17). Moreover, the global economic growth would expectedly jump by five percent in 2021, based on the assumption that the threat of COVID-19 would have already faded away, and business and consumer confidence would have already increased. Meanwhile, the Indonesian economy could grow by 5.3 percent next year.

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