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TAIPEI, TAIWAN – Indonesia, despite the increasing burden of coronaviruses, has avoided blocking population centers in favor of softer control measures to maintain an economy already stressed by poverty.
The virus that affects most of the world has now sickened 3,293 people in Indonesia and killed 280. On Friday, the capital Jakarta ordered the closure of two weeks of offices and banned meetings of more than five people, but not issued a stay in the country. house order and allowed some public transportation to keep running. Schools and restaurants had already closed.
Although the order extends to an urban area of approximately 30 million people, other parts of the archipelago, including its mines and palm farms, are not affected. Around 265 million people live on the 13,000 islands in Indonesia.
Officials should take into account their country’s poverty rate of nearly 10 percent, analysts said, as business closings hurt earnings. However, ignoring the deadly virus would allow it to spread and harm hospitals in rural areas.
“If we get to the point where they have to go into a total blockade like India or Malaysia, then the economic impact will be much greater,” said Rajiv Biswas, chief Asia-Pacific economist at IHS Markit. “There is a lot of downside risk for Indonesia right now.
“Many people live at or below the poverty line in Indonesia,” he added.
As it stands, Indonesia’s GDP should grow 3 percent this year instead of about the 5 percent expected in early 2020, said Anushka Shah, vice president of Moody’s Sovereign Risk Group in Singapore. Limited force closings will keep mines, farms and factories running, Shah said. Indonesia exports palm oil, coal, rubber, and minerals.
But Shah expects a drop in Indonesian exports, along with its prices, due to a drop in demand from abroad, where hundreds of millions of consumers are locked up and out of work.
“The shape and form that government measures take with regard to possible closings will determine output, but then much depends on demand, because global demand has slowed significantly and prices have also seen a drop,” Shah said.
Relatively mild containment measures will send a message to people that the spread of the coronavirus is not too severe, said Philips Vermonte, executive director of the Jakarta-based research center for Strategic and International Studies.
To complicate the situation, in most years, Indonesians travel in large numbers to their home cities for the Ramadan holiday, which begins later this month, a move that could make more people sick, Vermonte added. “In some corners, people will lose their guard and think it’s fine, and they are carriers (of diseases),” he said.
“I think the first thing that came to the government’s mind in March was the economy, and they probably thought the emergency was not there at the time,” he said. COVID-19 cases began to grow markedly in mid-March.
Now central and local governments fear that hospitals and doctors may not have the capacity to handle a spiraling case load, Vermonte said.
Indonesia has announced a total of $ 8.725 billion in stimulus to ease economic losses.
The current account and budget deficits of the Southeast Asian country are low, good at absorbing economic shocks, Moody’s said in a research note on April 3. But weak “debt affordability” could later challenge the government to mitigate economic damage, according to the note.
The poor can leave Jakarta. Many are migrant workers who sell from the street to offices and schools, said Paramitaningrum Supamijoto, a professor of international relations at Bina Nusantara University in Jakarta.
“Closing the stores, closing the offices, closing the schools will affect your income, especially if you are selling food, selling products,” said Supamijoto. “No one is going to go out, or prefer (order) online.”
If migrant workers go home, he said, they risk spreading the virus from Jakarta to the rest of Indonesia.
Around Jakarta, most retailers had already closed as of early Friday and people stayed home whenever possible, including attending online classes, Supamijoto said. However, Muslims still pray in mosques, he said, and shopping malls with supermarkets or pharmacies remain open.
