World Bank Predicts Indonesia’s Economy to Shrink 3.5% if Social Restrictions Extend for 4 Months

With the Government of Indonesia planning to re-open its economy, the World Bank (WB) has predicted the Indonesian economy to shrink by 3.5% in a worst-case scenario, if the nationwide large scale social restrictions (PSSB) imposed by regional Governments last for four months. However, under its baseline scenario, Indonesia is expected to grow 0% this year.

According to Ralph van Doorn the WB’s Senior Economist for Indonesia, the WB expects private consumption in Indonesia to decline driven by layoffs and a fall in consumer confidence. Van Doorn stated that the WB also expects a slowdown in investment growth due to weaker economic activity and falling commodity prices.

With fou...