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Indonesia set its target for economic growth next year at 4.5%-5.5%, President Joko Widodo said in his annual budget speech Friday, forecasting a solid recovery from the coronavirus pandemic that has decimated Southeast Asia’s largest economy this year.
The fiscal deficit will narrow to 5.5% of gross domestic product in 2021, from 6.34% expected this year, Widodo said Friday in Jakarta.
Indonesia’s economy shrank 5.32% in the second quarter compared to a year earlier, its first contraction in more than two decades, as movement restrictions to contain the coronavirus outbreak decimated business. The government plans to spend as much as 1,476 trillion rupiah in the six months through December to boost the economy, Finance Minister Sri Mulyani Indrawati said last week.
The country is still grappling with a surge in infections since the partial lockdown was eased at the end of May. Indonesia has more than 130,000 confirmed cases of Covid-19 virus and almost 6,000 deaths, the second-highest caseload and highest death toll in East Asia.
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