The downgrade is based on lower-than-expected growth in private consumption until March, 2021 owing to restrictions on public mobility aimed at accelerating the government's national vaccination program, Bank Indonesia Governor Perry Warjiyo said in an online press conference on Tuesday.
"We looked at restrictions on public mobility in the first and second quarters (of this year), amid the implementation of (the national) vaccination (program). As a result (of the restrictions), the increase in private consumption was not as high as we expected," he explained.
Though domestic consumption recorded an increase, as reflected by several indicators, including consumer expectations and retail sales, it was still lower than the previous forecast, he pointed out.
Warjiyo said he believed the national economy would continue to improve until the fourth quarter, fueled by improving export performance, and continued fiscal stimulus and investment, as reflected by the manufacturing Purchasing Managers’ Index (PMI).
He predicted exports would continue to increase and grow higher than the projections made early this year, pushed particularly by crude palm oil (CPO), metal ore, pulp and waste paper, motor vehicles and steel.
The export hike will result from high demand in partner countries, particularly China, he said.
Spatially, improving export performance will be recorded in Java and Sulawesi-Maluku-Papua (Sulampua), he projected.
He also noted that the government's fiscal stimulus in the form of social assistance, goods spending, and capital spending will continue to increase and be higher than expected.
"The implementation of vaccinations and discipline in following the COVID-19 health protocols is constantly needed to accelerate the improvement of domestic demand," he remarked.
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