Indonesia’s government will spend aggressively in the coming months to support a nascent economic recovery after measures to contain the coronavirus pandemic sent Southeast Asia’s largest economy into its first contraction in more than two decades.

State spending will total about 1,476 trillion rupiah ($101 billion) in the six months through December, Finance Minister Sri Mulyani Indrawati said during a briefing in Jakarta on Wednesday. A ramp up in government spending will sustain the recovery momentum seen with the easing of mobility restrictions, she said.

“We are accelerating spending mostly for social protection and supporting businesses,” Indrawati said. “We’re also pushing ministries and institutions. With all these steps taken, we expect them to stimulate economic activity in the months ahead.”

With the economy sliding 5.32% in the second quarter, the worst performance since 1999, and private consumption and investment remaining sluggish, officials are turning to fiscal measures to reignite growth and prevent a full-year contraction. But a failure to contain the pandemic and with more lockdown measures looming, efforts to resume full economic activities may falter in the world’s fourth-most populous nation. The government has spent less than 25% of the almost $50 billion in fiscal stimulus, official data show.

“Reversing this under-spending will be crucial for reviving growth,” Joseph Incalcaterra, HSBC Holdings Plc’s chief Asean economist, said in a report. “While Indonesia’s GDP may not contract as sharply as other regional economies, the recovery will nonetheless be shallower, and policy support may be needed for a sustained period of time.”

Growth will remain subdued in the third quarter as well, with HSBC expecting the economy to contract 0.9%. While fiscal policy is expected to do the short-term heavy lifting, conventional monetary policy support will continue into 2021 with the central bank expected to lower interest rates by 50 basis points by the end of first quarter next year, Incalcaterra said.

Retail sales in the consumption-reliant economy have taken a knock amid the pandemic, while manufacturing continues to contract, as the latest purchasing managers index shows. Indonesia’s exports, dominated by commodities such as coal and palm oil, have shown some improvement in recent months.

The government has lowered its growth forecasts several times already and now sees GDP in a range of -0.4% to 1% for the year. The central bank has cut its own estimate to 0.9%-1.9% growth. Indrawati said a second wave of virus cases in various countries and lack of clarity about vaccine availability are adding to the global uncertainties.

Bank Indonesia will continue to strengthen synergies with the government and related authorities through its policy mix to ensure various measures initiated are more effective in strengthening the economic recovery, it said in a statement.

With Indonesia’s capital Jakarta and its suburbs delaying further easing of mobility restrictions due to a surge in virus cases, a revival in private consumption, the bedrock of growth, is going to be gradual in the second half, according to Sung Eun Jung, an economist at Oxford Economics Ltd. in Singapore.

“We forecast a slow recovery path with annual growth still contracting in the second half before returning to positive territory in 2021, amid a lingering virus outbreak and an overstretched healthcare system,” Sung wrote in a report. “Exports, however, should benefit to some degree from the turnaround in Chinese import demand.”

Indonesia didn’t impose a nationwide lockdown like many of its neighbors, and began easing some of the restrictions put in place to contain the pandemic from June. Confirmed cases have almost quadrupled since then with the cumulative tally reaching 116,871 on Wednesday and fatalities totaling 5,452, the highest in Southeast Asia.

Without effective measures to contain the pandemic, a full economic recovery may be elusive, according to Capital Economics Ltd., which expects Indonesia’s GDP to contract 3% this year.

“Fear of catching the virus means people will be reluctant to fully resume their normal lives. Social distancing will need to last for longer,” Gareth Leather, an economist at Capital Economics, wrote in a note. “Indonesia’s policy response has been underwhelming.” — Bloomberg

WASHINGTON – Drugmakers will likely have tens of millions of doses of coronavirus vaccines in the early part of next year, Anthony Fauci, the top U.S. infectious diseases official, said in a Reuters interview on Wednesday, offering a more conservative view of the ramp up than some Trump administration officials.

Fauci said there could be a billion vaccine doses available by the end of 2021, and that he is hopeful the world could get past the pandemic that has claimed more than 700,000 lives worldwide by then, with the help of a vaccine.

U.S. Secretary of Health and Human Services Alex Azar said last month the U.S. would have hundreds of millions of vaccine doses by early in 2021.

Those goals are only possible because drugmakers have agreed to manufacture large supplies of their vaccines even before they know whether they work in order to save time.

“The federal government has put more than one egg in the basket,” Fauci said. “We have a pretty comprehensive portfolio that’s going to subsequently be going into clinical trials.”

He said there might be an indication that at least one vaccine works and is safe by year end.

“I’m cautiously optimistic that we will have a vaccine that’s effective enough to get approved,” he said.

That will not happen because of any pressure to have a vaccine available in time for the Nov. 3 presidential election, he said. Health regulators have promised “they are not going to let political considerations interfere” with the need to deliver a safe COVID-19 vaccine, Fauci said.

Fauci’s interview with Reuters came on the same day Trump said in an interview with Fox News that the virus is “going away. It will go away like things go away.”

Fauci offered a more mixed assessment, saying some parts of the country had done well in containing the spread of the virus, while others were “on fire.”

“I hope, and feel it’s possible, that by the time we get through 2021 and go around for another cycle that we’ll have this under control,” he said.

The United States is committed to spending billions of dollars on vaccines being produced by companies including Johnson & Johnson, Moderna Inc, Pfizer Inc , Novavax Inc and Sanofi SA, employing a variety of technologies.

Fauci said he did not favor one approach over any other.

“All of them look pretty good,” he said. “The proof of the pudding is the randomized placebo controlled trial.” — Reuters

TOKYO – Bells tolled in Hiroshima on Thursday for the 75th anniversary of the world’s first atomic bombing, with ceremonies downsized due to the coronavirus and the city’s mayor urging nations to reject selfish nationalism and unite to fight all threats.

Though thousands usually pack the Peace Park in the center of the Japanese city to pray, sing and offer paper cranes as a symbol of peace, entrance was sharply limited and only survivors and their families could attend the memorial ceremony.

The city said the significance of the anniversary of the bombing that killed 140,000 people before the end of 1945 had prompted its decision to hold the ceremony despite the spread of the virus, but taking strict precautions.

“On August 6, 1945, a single atomic bomb destroyed our city. Rumor at the time had it that ‘Nothing will grow here for 75 years,'” said mayor Kazumi Matsui.

“And yet, Hiroshima recovered, becoming a symbol of peace.”

At 8:15 a.m. on Aug 6, 1945, U.S. B-29 warplane Enola Gay dropped a bomb nicknamed “Little Boy” and obliterated the city with an estimated population of 350,000, where thousands more died later from injuries and radiation-related illnesses.

On Thursday, as cicadas shrilled in the heavy summer heat and the Peace Bell sounded, the crowd stood to observe a moment of silence at the exact time the bomb exploded.

“When the 1918 flu pandemic attacked a century ago, it took tens of millions of lives and terrorised the world because nations fighting World War I were unable to meet the threat together,” Matsui added.

“A subsequent upsurge in nationalism led to World War Two and the atomic bombings. We must never allow this painful past to repeat itself. Civil society must reject self-centered nationalism and unite against all threats.”

Prime Minister Shinzo Abe attended as usual, but the number of foreign visitors was down. Overall attendance was scaled back to less than a tenth of the usual figure, with chairs spaced far apart and most people wearing masks.

Matsui urged Japan to ratify a 2017 United Nations pact banning nuclear arms, but Abe avoided any direct reference, saying Japan would “work as a bridge between nations” to abolish nuclear weapons.

Keiko Ogura, who was eight when the bomb blast knocked her off her feet, has dedicated her life to working for peace.

“The nuclear danger is spreading around the world, and under that mushroom cloud, no one can escape,” she told a recent news conference.

The anniversary was a top trending topic on Japanese Twitter as most users offered prayers for world peace, although one drew a parallel with this week’s huge blast that killed at least 135 in Beirut, the Lebanese capital.

“I really hadn’t been able to imagine it before, but looking at the damage from the Beirut explosion and imagining something several times more powerful, I was struck with a huge sense of fear,” wrote the commenter, identified as “Sato-san.”

The bombing of Hiroshima was followed by the bombing of Nagasaki on Aug. 9, instantly killing more than 75,000 people. Japan surrendered six days later, ending World War Two. – Reuters
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