Indonesia’s unemployment could hit record-high due to COVID-19 – Ministers


Indonesia, Southeast Asia’s largest economy, could hit its highest unemployment rate in more than a decade this year due to the coronavirus pandemic, its ministers warned.

Four million to 5.5 million people could lose their jobs this year, Planning Minister Suharso Monoarfa told a parliamentary hearing on Monday.

This could push the unemployment rate up to 8.1-9.2%, versus 5.28% in 2019 and the rate may remain between 7.7% and 9.1% in 2021, Monoarfa said.

The forecast is still more conservative than that of Indonesia’s chamber of commerce and industry (Kadin), whose chairman expects new rounds of layoffs by August on top of an estimated 6.4 million jobs shed so far.

The number of people living below the poverty line is expected to rise to between 26.2 million to 27.5 million, Mr. Monoarfa said, representing a poverty rate of 9.7-10.2% in a country with more than 260 million people.

“This pandemic between March 30 and June 6… has resulted in massive losses in working hours. This has shed around 362 trillion rupiah (S$35.5 billion) in purchasing power,” he said.

His ministry’s estimates were made assuming 2020 gross domestic product comes in within a range of a 0.4% contraction to a 1% expansion.

Finance Minister Sri MulyaniIndrawati told the same hearing second-quarter GDP was expected to contract 3.8%, compared with her previous estimate for a 3.1% drop.

She also warned a rising number of coronavirus cases recorded in some of Indonesia’s biggest provinces, such as East Java, could increase pressure on GDP.

Mr. Monoarfa predicted foreign exchange earnings from tourism this year would slump to US$3.3 billion to US$4.9 billion (S$4.6 billion to S$6.8 billion), from US$19.7 billion in 2019.

The government has allocated nearly US$50 billion in spending on healthcare, social protection and economic stimulus programmes to try to manage the pandemic’s impact. (Source: The Straits Times)