JAKARTA - Indonesia's gross domestic product is expected to contract by more than 3% on an annual basis in the third quarter, President Joko Widodo said on Monday, as he told his cabinet to speed up state spending to support the pandemic-hit economy.
The president, widely known as Jokowi, estimated household consumption shrunk by around 4%, while investment might have fallen by more than 5% in the third quarter.
The outlook was bleaker than his finance minister's previous prediction for a GDP contraction within a 1% to 2.9% range in July-September after a 5.32% fall in April-June.
The president did not provide an outlook for the fourth quarter, but said he hoped to see growth.
"The fourth quarter is the final quarter. I hope our spending can reach its maximum point," Jokowi told a cabinet meeting broadcast live, underlining how state spending is a critical driver for an economy hit by the coronavirus outbreak.
Jokowi said there was a prospect for investment to rebound in the October-December quarter after the United States extended a trade facility called the Generalized System of Preferences for Indonesia, which gave duty-free access to $2.6 billion worth of Indonesian exports in 2019.
Washington closed its GSP eligibility review for Indonesia with no loss of benefits last week, a few days after U.S. Secretary of State Mike Pompeo met with Jokowi during a visit to Jakarta.
Southeast Asia's largest economy is set to shrink for the first time this year since the 1998 Asian financial crisis, according to government estimates.
With more than 400,000 confirmed infections and around 14,000 deaths, Indonesia is struggling to deal with the worst COVID-19 outbreak in the region.
The statistics bureau will release the official third-quarter GDP data on Thursday.
(Reporting by Maikel Jefriando and Gayatri Suroyo Editing by Ed Davies) ((email@example.com; +622129927609; Reuters Messaging: firstname.lastname@example.org))