Three Industrial Sectors in Indonesia See Growth During the Pandemic

JAKARTA – According to data by Statistics Indonesia (BPS), the Indonesian economy contracted by 2.07% in 2020 because of the pandemic. This figure almost meets Bappenas’ initial prediction of a 2% contraction rate, as stated on the 2021 government working plan (RKP). 
This contracted growth has plunged Indonesia into one of its worst financial crises since 1998. Compared with other economies in Asia, Indonesia’s growth is still considered to be relatively miniscule to neighbors such as China, Taiwan and Vietnam, who all experienced positive economic growth rates in 2020. However, they remain the minority. Many major economies were hit hard by the pandemic, with the United States experiencing contraction rates of up to 2.5%. Others such as Hong Kong and the Philippines were also hit especially hard with 3% and 8.4% rates respectively. 
Suharso Monoarfa, the Minister of National Development Planning/Head of Bappenas, explained that while overall consumer spending rates in Indonesia declined, the sales of household items, health & sanitary goods and educational services grew due to the prioritization of health, hygiene, and education during the pandemic by the public. 
“We saw accelerated growths for the health service, pharmaceutical and communications sectors during the pandemic,” Minister Suharso noted in a recent Bappenas press conference titled “Indonesia’s Economic Growth: Working Smart, Quick and Thorough, Fostering Optimism,” on Monday (9/2/21). 
In 2020, the Indonesian health services sector experienced a 11.6% growth, while the pharmaceutical sector grew by 9.39%. This was caused by the sharp increase in demand for health & sanitary products such as soap, hand sanitizers, disinfectants, multivitamins, and food supplements. According to data by the World Trade Organization (WTO), global consumer demand for medical products grew by 31% due to an increased awareness towards sanitary measures and healthier living. 
Meanwhile, the communications and information sector experienced a 10.58% growth, boosted by the public’s increased consumption of digital media during the pandemic. The increase in demand of services such as online schools and worker productivity tools that accommodate work-from-home schemes, contributed towards digitalization efforts in Indonesia. 
Most notably, the e-commerce industry benefitted greatly from this shift as consumers turn to online shopping and services due to the abundance of time spent at home. It is estimated that the global e-commerce industry will continue to experience growth until 2023. 
In fact, according to data from Statista, the compound annual growth rate (CAGR) of Indonesia’s e-commerce industry between 2020 and 2024 is projected to be at 15.4%. In 2020, the Indonesian e-commerce sector recorded transactions of up to Rp 266.3 trillion. 
“The success and effectiveness of our pandemic management will be the factor that would help mend our economy quicker,” Minister Suharso added. “Through hard work and proper collaboration between sectors and institutions, I believe that Indonesia will be able to achieve its 4.5% to 5.5% economic growth target for 2021”.