A recession is widely thought to be on the horizon in Indonesia after the South East Asian country recorded its weakest GDP growth since 2001 in first quarter (Q1) 2020.
The Indonesian economy grew by an average of 12% p.a. (per annum) between 2008 and 2018 and has been a bright spot in the emerging South East Asian region.
According to gasworld Business Intelligence, Indonesia has generally benefited from fiscally conservative policies and a government committed to opening up the economy and stimulating sustainable growth.
The economy is quite varied, benefiting from considerable natural resources and a good balance between heavy and light industry.
All of which has been mirrored in its progressive gases industry; the industrial gas market in Indonesia has been growing strongly over the course of the last decade and is estimated to have generated revenues of $465m in 2018, up from $208m in 2008 and indicating an average annual growth rate of 8.5% for the decade (gasworld Business Intelligence).
Such growth has been firmly checked by the impact of coronavirus in the first quarter, however, with widespread reports describing the devastating effect the pandemic has had on the archipelago.
GDP in Q1 grew at a slower-than-expected rate of just under 3% (2.97%) from the year prior – the country’s weakest pace of economic growth since Q1 2001, revealed data from its official statistics bureau.
By comparison, growth in the previous quarter was pegged at just under 5% (4.97%).
Covid-19 has hit Indonesia hard, and particularly so in terms of consumption – the main driver of the economy – as well as investment and commodity exports. This market make-up is affirmed by gasworld Business Intelligence, which cites the largest end-users for industrial gases in Indonesia as being the general manufacturing and metallurgy sectors. These sectors contributing $162m and $117m, respectively, in industrial gas revenues in 2018 (total market value $465m).
Reports suggest Indonesia’s lockdown could remain in place for an extended period as the country continues its battle against Covid-19. According to the Center for Systems Science and Engineering (CSSE) at Johns Hopkins University (JHU), Indonesia has just over 11,500 confirmed cases of coronavirus at the time of writing, with 864 fatalities.