September 2020, Southeast Asia
COVID-19’s impact on growth by sector, region
Wilmar Salim

Indonesia saw 5.32 percent economic contraction year-on-year (yoy) during the second quarter due to the impact of COVID-19. Economic sectors that experienced the worst contraction included transportation-warehouse (-30.84 percent), accommodation-food and beverages (-22.02 percent), other services (-12.60 percent) and corporate services (-12.09 percent). Major growth drivers also contracted: manufacturing by 6.19 percent, trading 7.57 percent and construction 5.39 percent.

However, to find a silver lining in the dark cloud of this pandemic, we need to look at more than just the economic sectors but also examine the geographical distribution of the growth because in a crisis, there are usually areas that are more resilient than other regions, especially in Indonesia, the world’s largest archipelagic country.

There are several sectors that recorded positive growth: information and communication (10.88 percent), water supply (4.56 percent), health services (3.71 percent), real estate (2.30 percent), and agriculture (2.19 percent). The contribution of the agricultural sector to the national economy was the second-highest (15.46 percent) after the manufacturing industry (19.87 percent).

Statistics Indonesia (BPS) reported three provinces on Java Island recorded quite high growth rates for the agricultural sector: West Java (7.64 percent), Yogyakarta (10.06 percent), and East Java (7.46 percent). Besides that, West Nusa Tenggara (NTB) also recorded growth of 7.87 percent in the agricultural sector. This indicates that the agricultural sector is still the cornerstone of the economy in several regions.

The information and communications sector associated with digital economic activities contributed 4.66 percent (the fifth-largest) to the national economy. In this sector, the three provinces that recorded the highest growth were West Java (39.75 percent), Yogyakarta (20.74 percent) and Central Java (18.79 percent). It can be seen that several provinces in Java still have a big role in supporting the national economy.