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.
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.