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Indonesia's GDP Contracts Most Since 1999

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Indonesia's economy contracted at the fastest pace since the Asian financial crisis as measures to control the spread of coronavirus pandemic took its toll on consumption, investment and trade, data from the statistics bureau revealed Wednesday.

Gross domestic product fell 5.32 percent year-on-year in the second quarter, reversing last quarter's 2.97 percent growth.

This was the biggest drop since the first quarter of 1999 and also larger than economists' forecast of 4.61 percent decline.

On a quarterly basis, Southeast Asia's biggest economy contracted 4.19 percent versus the expected decrease of 3.49 percent.

The expenditure-side breakdown of GDP showed that household consumption declined 5.51 percent annually and government expenditure dropped 6.9 percent.

Likewise, investment decreased 8.61 percent. Exports and imports were down 11.66 percent and 16.96 percent, respectively.

The government forecast GDP to log -0.4 percent to 1 percent growth in the full year of 2020.

In order to support economic growth, the central bank had reduced its key interest rate by 100 basis points so far this year.

ING economist Nicholas Mapa said the economy is set to contract in the third-quarter too by 5.1 percent with pressure on Indonesian fiscal and monetary authorities to provide more stimulus to bolster sagging growth momentum.

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