Indonesia struggles to avoid recession

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    JAKARTA- Indonesia’s economic recovery was “very fragile” and could reverse as shown by tax revenue data in July, the country’s finance minister said on Tuesday, warning that the economy is struggling to avoid a recession.

    Revenues had improved temporarily in June after coronavirus-induced restrictions were eased, but the improvement stagnated in July and contributions from some sectors such as trade, mining and construction deteriorated, Minister Sri Mulyani Indrawati said, describing this as “a map that shows our economic recovery is very fragile and may reverse.”

    Indrawati said for Southeast Asia’s largest economy to record flat growth of around 0 percent in the third quarter would “require an extraordinary struggle”. The economy contracted 5.32 percent in April-June from a year earlier.

    She expected July-September GDP within a range of -2 percent to 0 percent, but maintained her 2020 outlook of between -1.1 percent to 0.2 percent.

    “We will see if the trend continues in August, whether we can stay in the zone of near 0 percent and we can continue to guard against falling into recession,” she said.

    In January-July, total state revenue fell 12.4 percent on year, while total spending rose 1.3 percent.

    Just over a quarter of the nearly $50 billion fund set aside to ease the impact of the pandemic on businesses and households had been disbursed, she said.

    Economists have criticized the government for spending too slowly and Indrawati said the government was working to accelerate expenditure, including by redesigning programs that might not work. – Reuters