Morgan Stanley Cuts Growth Forecast for Indonesia

JAKARTA, KOMPAS.com – Morgan Stanley has revised downward its 2021 growth forecasts for Indonesia from 6.2 percent to 4.5 percent.

Morgan Stanley economist Deyi Tan said the shrinking projection of the economic growth in many Asian countries, including Indonesia, was due to the implementation of tighter social restrictions.

This certainly has implications for industries that need intensive physical contacts, such as hotels and restaurants, public entertainment places, personal care services, and gyms.

“There is a possibility of constraints in domestic demand that will continue in the second quarter of 2021, we estimate that there will be lower growth in the market, especially in developing countries in Asia,” Deyi told a press conference on Tuesday, May 18.

Also read: Morgan Stanley: Indonesia Could Rank in Second-Fastest Group of Economies to Recover

The projected growth could not be separated from the negative economic growth in the first quarter previously and the following quarters.

The global investment bank said that the country’s economic growth in the second quarter of 2021 is now projected at 6.5 percent after it contracted 0.7 percent in the first quarter. The growth is affected by the low-base effect in the second quarter which contracted 5.32 percent.
Therefore, the economic growth is expected to shrink 6.3 percent and 6.2 percent in the third and fourth quarters respectively.

Also read: Baca juga: Indonesia’s Economy Shrinks 0.74 Percent in Q1

Meanwhile, the gross domestic product (GDP) growth forecast for Indonesia in the first quarter of 2022 is six percent and it is expected to decline to 5.3 percent, 5.2 percent, and 5.2 percent in the following quarters. With that, the country’s economic growth forecast for 2022 is 5.4 percent or a slight decrease from its previous projection at 5.5 percent.

Deyi said that the projections took into account the Covid-19 condition which might worsen. If a new wave of Covid-19 in some countries leads to an increase in the number of hospitalized Covid-19 patients, it could lead to lockdowns and a burden on domestic demand.

(Writer: Fika Nurul Ulya | Editor: Erlangga Djumena)

Source: https://money.kompas.com/read/2021/05/18/120600226/morgan-stanley-revisi-ekonomi-indonesia-2021-jadi-hanya-4-5-persen-?page=all#page3.