Surge heightens doubts on Indonesian recovery

Even amid an apparent economic recovery in Indonesia, Arian Mulyadi is concerned about his company's future.

The businessman says his firm in Jakarta, which imports and distributes electrical goods, has yet to feel the ultimate effects of the rise in the number of COVID-19 cases because of the Delta variant.

"I still cannot predict what will happen with our business in the next few months," Mulyadi said. "Many government projects have stopped."

HW Yohanes, an accountant, is wary of leaving his home because some of his colleagues have contracted the coronavirus. He has avoided normal work in the office and supports the government's reimposed and extended lockdown measures, he said.

Southeast Asia's biggest economy has officially exited recession, its GDP rising 7.07 percent in the second quarter this year, according to official figures published on Aug 5.It was the first growth in five quarters and came on a low base last year, when the economy was stricken by the pandemic.

Analysts say they are unsure if the rebound can be sustained for the rest of the year, given the resurgence in COVID-19 driven by the highly infectious Delta variant. Lockdown measures that were to end a week ago were extended at least until this Monday.

Movement restrictions will crimp business activity and dampen consumption, hurting the economy.

Sanjay Mathur, chief economist for Southeast Asia and India of ANZ Bank, said that while second-quarter figures imply that Indonesia is out of recession, they do not indicate a long-term trend. The GDP figure benefited from a low base because the economy contracted 5.3 percent in the corresponding period last year, he said. ANZ Bank has trimmed its economic growth forecast for Indonesia for the year to 3.8 percent from 4 percent.

Wisnu Wardana, an economist at Bank Danamon Indonesia, one of the country's biggest commercial banks, said: "Our sensitivity analysis suggests that if these restrictions end in August, then our GDP forecast for 2021 remains at 3.4 percent. Should (the restrictions remain in) the third quarter, then Indonesia may head into a double-dip growth trajectory, closing the year with 2 percent growth."

Battling outbreaks

Indonesia is battling one of Asia's worst COVID-19 outbreaks, with more than 3.8 million cases detected by Friday, according to the World Health Organization. The virus has killed more than 115,000 people in the archipelago and has strained the country's public health system.

The government has moved to contain the spread of the virus by launching a vaccination program and imposing emergency community measures in the more populous islands of Java and Bali. These two islands are home to more than half of the nation's population of 270 million.

However, last Monday a senior minister, Luhut Binsar Pandjaitan, said some restrictions would be eased in Jakarta and the Javanese cities of Bandung, Semarang and Surabaya.

Shopping malls and offices were allowed to reopen in these four cities but at a limited capacity. Those who have been vaccinated can go to the malls but they need to have vaccination cards and install a tracing app in their smartphones.

Leonardus Jegho, a freelance journalist for China Daily in Jakarta, contributed to this story.