Bank Indonesia likely to lower 2020 GDP outlook as coronavirus spreads

DAMPAK VIRUS CORONA - JAKARTA. Indonesia's central bank is likely to lower its outlook for 2020 economic growth at its next policy meeting as the coronavirus spreads globally, its governor said on Wednesday.

At February's policy meeting, Bank Indonesia Governor Perry Warjiyo had predicted the virus outbreak would have a V-shaped effect on economic growth, with a baseline rate of 5.1% that could go up to 5.2% with fiscal policy support. Growth in 2019 was 5.02%.

"But with outbreaks in developed countries, we have to calculate again," he told a banking conference, citing a rising number of infections in countries like Italy and Japan.

"In the next policy meeting, the likelihood is the figure will be lower."

The next policy meeting is March 18-19.

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Since the virus began spreading in China in late December, more than 116,000 cases and over 4,000 deaths have been reported globally, with Italy putting itself on a nationwide lockdown to slow the outbreak. Fears of a global recession are growing amid a drop in trade and tourism and increasing business disruptions.

Indonesia confirmed cases for the first time this month, with 27 recorded so far.

Despite the current uncertainty, Warjiyo still expects economic activity to begin recovering in April but said it will take six months to return to normal.

BI cut its benchmark interest rate last month, its fifth reduction since May, in response to the virus outbreak, and Warjiyo said growth this year may be slower than initially expected, within a range of 5.0%-5.4%, compared to BI's previous range of 5.1%-5.5%.