Jakarta. The International Monetary Fund has cut its projection for the Indonesian economy while predicting the global economy would slump into a deeper recession this year.

The IMF now says the largest economy in Southeast Asia would shrink by 0.3 percent in 2020, before rebounding to a 6.1 percent growth in 2021. 

The world economy is likely to see a 4.9 percent contraction this year, the IMF said, 1.9 percent lower than its April projection.

The global economy would enter a U-shaped recovery with a 5.4 percent expansion in 2021, according to the Fund. 

Prolonged lockdown and social distancing have depressed consumption and services output while companies cut back on investment, the IMF said in a statement on Wednesday.

The global economic projection could be much worse should a second wave of the Covid-19 pandemic hit the US or Europe later this year. 

"A second wave would generate basically zero growth in 2021. That's a classic L-shape nonrecovery," IMF chief economist Gita Gopinath sain on Wednesday in an interview with Bloomberg TV. 

"That would be a really dire outcome and we will be getting even closer to the Great Depression levels than we already are," Gopinath said. 

In Indonesia, Covid-19 has infected close to 50,000 people and killed more than 2,000 but the government has kept on with its plan to reopen the economy in the past week.

The government has projected growth of between -0.4 percent and 1 percent this year. On Wednesday, it agreed with the House of Representatives to target growth of between 4.5 percent and 5.5 percent next year.