Indonesia cuts rates as virus batters SE Asia's biggest economy

Indonesian police keep watch as motorcyclists idle at markers while stopped at a traffic light as part of social distancing measures amid the COVID-19 coronavirus in Banda Aceh on July 16, 2020. (Photo: AFP)
Jakarta, Indonesia | Indonesia's central bank on Thursday cut interest rates for the fourth time this year as Southeast Asia's biggest economy is battered by the global pandemic.

Policymakers at Bank Indonesia reduced the key lending rate by 25 basis points to 4.00 percent, days after the government warned of a looming recession.

Indonesia's central bank on Thursday cut interest rates for the fourth time this year as Southeast Asia's biggest economy is battered by the global pandemic.

Policymakers at Bank Indonesia reduced the key lending rate by 25 basis points to 4.00 percent, days after the government warned of a looming recession.

Central bank governor Perry Warjiyo said the latest rate cut was a "further step" to boost the struggling economy, adding that there were signs of a recovery as a stimulus plan kicks in and virus restrictions are eased.

"But we're not back to pre-pandemic levels," Warjiyo said

Finance minister Sri Mulyani Indrawati has warned that Indonesia's economy is set to contract 4.3 percent in the second quarter and shrink again in the July-September period.

Two consecutive quarters of negative growth would mark Indonesia's first recession since the 1998 Asian financial crisis.

Indonesia has announced a stimulus package worth more than $48 billion to help offset the impact of coronavirus, which forced a wide-scale shutdown that hammered growth, including in the key tourism sector.

The Southeast Asian archipelago, home to nearly 270 million people, has been easing movement restrictions in a bid to head off economic collapse.

But Indonesia's COVID-19 infections are mounting as cases top 80,000 with nearly 3,800 deaths.

The true scale of the public health crisis is widely believed to be much bigger in a country with one of the world's lowest testing rates.

Central bank governor Perry Warjiyo said the latest rate cut was a "further step" to boost the struggling economy, adding that there were signs of a recovery as a stimulus plan kicks in and virus restrictions are eased.

"But we're not back to pre-pandemic levels," Warjiyo said

Finance minister Sri Mulyani Indrawati has warned that Indonesia's economy is set to contract 4.3 percent in the second quarter and shrink again in the July-September period.

Two consecutive quarters of negative growth would mark Indonesia's first recession since the 1998 Asian financial crisis.

Indonesia has announced a stimulus package worth more than $48 billion to help offset the impact of coronavirus, which forced a wide-scale shutdown that hammered growth, including in the key tourism sector.

The Southeast Asian archipelago, home to nearly 270 million people, has been easing movement restrictions in a bid to head off economic collapse.

But Indonesia's COVID-19 infections are mounting as cases top 80,000 with nearly 3,800 deaths.

The true scale of the public health crisis is widely believed to be much bigger in a country with one of the world's lowest testing rates.

© Agence France-Presse

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