JAKARTA (Reuters) - The coronavirus epidemic in China may knock 0.1 to 0.3 percentage point off Indonesia’s economic growth by hurting tourism and the pharmaceutical sector, Indonesia’s Chief Economic Affairs Minister Airlangga Hartarto said on Thursday.
The assumption was based on the epidemic causing a GDP growth reduction of 1 to 2 percentage points in China, which is Indonesia’s biggest trading partner and a major source of direct investment, he told reporters.
Indonesia imports many pharmaceutical products from China’s Wuhan city, the center of the outbreak, he said.
“Because they extended the holidays there, production will fall,” Hartarto said, predicting a delay in shipments of some products.
Indonesian drug makers may look to India to find materials to cover for the disruption in shipments from China, Hartarto said.
Southeast Asia’s largest economy stands to lose $4 billion in earnings from tourism if its worst-case scenario materializes and travel from China is disrupted for the whole year by the virus outbreak, Tourism Minister Wishnutama Kusubandio said.
Indonesia’s GDP growth had already slowed to 4.97%, its weakest pace in three years, in the final quarter of 2019, according to data released on Wednesday, and economists expect the central bank to further cut rates to shield the economy from the impact of China’s outbreak.
The Indonesian government is targeting 5.3% economic growth this year. Full-year 2019 GDP growth was 5.02%.
The coronavirus epidemic has killed 563 people in China and two deaths have been confirmed elsewhere. Though the virus has been found in more than two dozen countries, Indonesia has no confirmed cases of infection.
Reporting by Maikel Jefriando; Writing by Gayatri Suroyo; Editing by Alex Richardson