Indonesia cut its growth forecast for 2020 by more than half as the spread of the novel coronavirus in the country continue to disrupt economic activity.
The economic fallout from the virus outbreak prompted the government to slash its 2020 growth outlook to 2.3% from the original projection of 5.3%, Finance Minister Sri Mulyani Indrawati said, according to Bloomberg News. If the health crisis deteriorates further, the economy could contract 0.4%, she warned.
Indonesian President Joko Widodo declared on March 31 a state of emergency and signed a government regulation raising state budgetary spending for 2020 by 405.1 trillion Indonesian rupiah.
The fiscal deficit is expected to widen to 5.07% of GDP in 2020, up from the previous target of 1.76%, Indrawati said. Government revenue is projected to fall by 10%.
Moreover, inflation is projected to rise to a range of 3.9% to 5.1%, according to Indrawati. The Indonesian rupiah, which already dropped 13% over the last month, may slide down further to as low as 20,000 per U.S. dollar, she added.
As of March 31, US$1 was equivalent to 16,189 Indonesian rupiah.