Indonesia's Economic Growth in 2020 Lowest Since 1998

Indonesia's economy contracted by -2.07% throughout 2020. This figure is the lowest since 1998, during the monetary crisis, when the country's economy grew by -13.13%.

The poor state of the Indonesian economy last year was due to the impact of the Covid-19 pandemic. Economic activity was hampered by policies restricting public movement. Indonesia's economy went into negative territory in the second quarter of 2020 and continued until the fourth quarter of 2020. In the fourth quarter of 2020, the country's economy grew by -2.19%.

By industry, only seven sectors showed positive growth throughout 2020: agriculture (1.75%), financial and insurance services (2.37%), information and communication (10.58%), education services (2.63%), real estate (2.32%), health and social activities (11.6%), and water supply (4.94%).

The remaining ten sectors experienced negative growth, with the sharpest declines in transportation and warehousing (-15.04%) and accommodation and food services (-10.22%). The contraction in accommodation and food services was due to lower occupancy rates, a decrease in foreign tourists, and the closure of several hotels.

From the expenditure side, only government consumption showed positive growth at 1.94%. The engines of the Indonesian economy, namely household consumption and gross fixed capital formation (GFCF), contracted by -2.63% and -4.95%, respectively.