Will Indonesia, Vaccinating Like China, Also Experience Economic Growth Like China?

Economic Indicators Rise After Vaccination Start
Significant Time Needed for Actual Economic Recovery

▲Indonesian President Joko Widodo receiving a COVID-19 vaccine on the 13th. [Image source=Yonhap News]

[Asia Economy Jakarta Correspondent Sujin Choi] Starting with President Joko Widodo, Indonesia has officially launched its nationwide COVID-19 vaccination campaign. Economic experts say that while the primary goal of the vaccination program is economic recovery, it will take time before tangible effects are seen.

President Jokowi's vaccination was broadcast live nationwide on the 13th. Indonesia is operating a free vaccination program and is conducting vaccinations sequentially. In the first phase, with daily confirmed COVID-19 cases soaring above 10,000, 1.3 million frontline healthcare workers will be prioritized for vaccination by next month. Indonesia is the first country outside China to grant emergency use authorization for the vaccine developed by China's Sinovac Biotech.

Following the announcement of the vaccination rollout, economic indicators rose simultaneously. The Jakarta Composite Index (JCI) increased by 2% on the 11th, when the emergency use authorization was announced, and the benchmark index rose an additional 0.62% on the 13th, when the vaccination program began. The rupiah exchange rate also appreciated by 0.5%.

Indonesian consumers have shown a positive outlook toward COVID-19 over the past few months. According to Bank Indonesia, the Indonesian Consumer Confidence Index (CCI) rose from 92 to 96.5, reflecting improvements in employment prospects and income growth.

Indonesia places great hope in the vaccine. However, experts diagnose that it will take a considerable period before the economy truly warms up. Economic expert Satira Sambijantoro stated, "It will take time until COVID-19 is controlled to a manageable level. While the vaccination program will help boost consumer confidence, it alone will not immediately lead to economic recovery; structural reforms are needed to attract investment."

Indonesia experienced its worst economic recession in 20 years last year and is expecting 5% economic growth this year. In an interview with The Jakarta Post, Chris Lane, Managing Director of the British Chamber of Commerce, said, "The free vaccination program is something to celebrate, but evidence of winning the fight against the economic crisis will be a substantial decrease in COVID-19 hospitalization rates." Anvita Basu, Chairperson of global market research firm Fitch Solutions, said, "The vaccination program will proceed slowly and will be a labor-intensive process, so industries in tourism and leisure will continue to face difficulties."

Meanwhile, there is controversy over the vaccination priority order. Among Indonesia's 186 million people, the working population aged 18 to 65 will be vaccinated first. Although 18 million people aged 65 and older are vulnerable to COVID-19, they have been placed lower in the vaccination priority.