Return to Jakarta lockdown will hit economy this quarter, but bitter pill needs to be swallowed: Economists

JAKARTA: The decision to re-impose a partial lockdown in Jakarta will hit the Indonesian economy this quarter, but these restrictions are necessary so that the economy can again grow positively in the long term, said experts interviewed by CNA.

“Without focusing on handling the pandemic, it will be difficult for the economy to recover. The government has been experimenting with the transitional large-scale social restrictions but the fact is the malls are still quiet, the mobility of the population is also low. Especially the upper-middle class, are still hesitant to shop if the threat of a pandemic is still high,” he added.

But over the past few days, Jakarta has consistently recorded more than 1,000 new infections daily resulting in almost fully occupied isolation wards and ICU rooms. Restaurants can only serve takeaways but unlike during the previous restrictions, malls may still open. “The large-scale social restrictions will certainly have a negative impact on the economy, but because the restrictions are not as strict as before, the impact will not be as big as the first implementation of the large-scale social restrictions in the second quarter,” she explained.

With malls and retailers still allowed to operate, people can still spend which would contribute to some economic growth, he added. A woman wearing a protective face mask works at a food stall as Indonesia's capital Jakarta returns to large-scale social restrictions amid the COVID-19 outbreak in Jakarta, Sep 14, 2020.

“The fourth quarter will depend on two things: the enforcement of the restrictions and the disbursement of the government’s budget. The large-scale social restrictions can be extended if COVID-19 infections have not shown a decline.

Source: Financial Digest (financialdigest.net)

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