Indonesia slips into recession

Indonesia slipped into an economic recession in the July-September quarter, for the first time since the 1998 Asian financial crisis, as the impact of the Covid-19 pandemic continued to take its toll on southeast Asia's largest economy.

The country's economy contracted by 3.49pc from a year earlier for the third quarter, following a contraction of 5.32pc in the April-June quarter, according to Indonesia's statistics agency BPS.

Indonesia's most populous region of Java saw its economy contract by 4pc during July-September. Indonesia's capital Jakarta, which is in Java, started a second Covid-19 lockdown in the middle of September. Bali-Nusa Tenggara, which relies heavily on the tourism sector that has been decimated by Covid-19, saw the deepest contraction at 6.8pc.

Economic forecasters had predicted the impact of Covid-19 to hit developing economies hard in Asia-Pacific, with the Asia Development Bank expecting them to shrink for the first time in almost 60 years.

Indonesia is the world's largest thermal coal exporter, shipping 456.4mn t last year. It planned to export 435mn t this year. But its exports hit a three-year low of 29.3mn t in August, customs data show, because of Covid-19 disruptions and reduced demand. They may have dropped below 25mn t in September, according to Argus estimates based on shipping data.

Indonesia is also Asia-Pacific's largest gasoline buyer but its demand has slowed considerably this year because of reduced driving activity with Covid-19 lockdowns. It bought around 277,000 b/d of gasoline during January-September according to GTT customs data, down from 341,000 b/d for the same period last year. But September imports of 307,000 b/d rebounded to their highest level since April this year as volumes moved closer to pre-pandemic levels.

By Richard Davies