MACROECONOMICS - BENGALURU. Indonesia's economic growth is expected to have slowed significantly in the third quarter as restrictions imposed to prevent the spread of the coronavirus Delta variant put the brakes on a nascent recovery, a Reuters poll found.
After reporting annual growth of 7.07% in the second quarter in the July-September period compared with the same three months a year earlier, according to the median forecast of 21 economists in the poll.
If realised, it would also be well below the latest government forecast for the third-quarter growth of 4.5%.
Forecasts in the poll for gross domestic product (GDP) growth, due to be released on Nov. 5 at 0400 GMT, ranged from 1.6% to 5.2%, underscoring the widespread uncertainty around the impact of the pandemic on the economy.
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On a quarter-on-quarter basis, growth was expected to have slowed to 1.80% from 3.31% in the second quarter. That was based on a smaller sample of forecasts.
"The government was forced to tighten measures last quarter to stem the surge in virus cases, and we expect the services sector will have been hit especially hard," said Alex Holmes, emerging Asia economist at Capital Economics.
"Even after the pandemic is over, the crisis will leave behind it a legacy of higher debt, impaired balance sheets and bankruptcies which mean GDP is unlikely to ever regain its pre-crisis path," he said.
Although the government has gradually eased lockdown restrictions after a sharp fall in coronavirus cases since July, when Indonesia was Asia's COVID-19 epicentre, the country is still not completely free from the virus.
