JAKARTA (Reuters) - Indonesia revised down its 2020 gross domestic product (GDP) outlook on Tuesday, expecting a steeper contraction due to the fallout of the coronavirus pandemic even as it tries to ramp up spending to cushion the blow.
Southeast Asia's largest economy would likely shrink within a range of 1.7% to 0.6% on an annual basis in 2020, Finance Minister Sri Mulyani Indrawati told a virtual news conference, down from her previous expectation of a range of 1.1% contraction to 0.2% growth.
The forecast took into account a new third-quarter GDP outlook of a contraction of 2.9% to 1%, from the previous range of 2.1% to flat growth, and potential negative growth in October-December, the minister said.
Indonesia's GDP shrank for the first time since 1999 in April-June, by 5.32%.
"Although we saw improvement in the third quarter and we could see the economy recovering ... it was still very early, fragile and must be guarded," Sri Mulyani said, describing the recovery in some sectors as flattening based on August data.
The minister said she hoped the semi-lockdown currently reinstated in Jakarta would not disrupt the economy too much and pledged the government would go "all out" to accelerate spending to support the economy.
Bank Mandiri economist Andry Asmoro said the new forecast was closer to his 2020 outlook of a 2.2% yearly contraction, based on "a flattening recovery and a drop in transactions due to rising COVID cases".
Coronavirus cases in Indonesia rose by 4,176 on Monday, a fresh record daily increase that took the country's total tally to 248,852, with 9,677 fatalities.
The government had spent 56% of its 2020 budget in January-August, up 10.6% from last year, while state revenue had fallen 13.1%, with corporate tax payments under pressure, official data showed.
As of August, the fiscal deficit was 3.05% of GDP. The full year deficit outlook may be wider than the previously expected 6.34% and the government would monitor its implications for debt issuance, Luky Alfirman, the finance ministry's head of financing department said.
(Reporting by Gayatri Suroyo and Tabita Diela; Editing by Clarence Fernandez and Stephen Coates)