JPMorgan is constructive on Indonesia regardless of surging Covid circumstances within the nation

SINGAPORE – JPMorgan sees the outlook for Indonesia as positive, although the country is still grappling with rising Covid infections. The number of cases has recently exceeded a million.

The country’s young population is part of the reason for this optimism, said James Sullivan, head of ex-Japan Asian equity research at the investment bank.

“Demographically, Southeast Asia is very different from some of the developed countries we compare these countries with,” Sullivan told CNBC’s Squawk Box Asia on Wednesday.

In 2015, the median age of the Indonesian population was 28.5 years, according to Statista.

“Because they’re so much younger, they tend to tackle the mortality side of this conversation significantly better than some of the older, developed economies,” he said. “That’s a very important distinction when we think about it.”

As a result, lockdowns “may not be as necessary” in such countries – compared to places with significantly older populations that are at higher risk from Covid-19, the analyst said.

India as an example

To make his point clear, Sullivan used the example of India, a country that, according to Johns Hopkins University, ranks second in the world after the United States in terms of the number of Covid infections.

“There was long talk of infection rates in India until around August last year,” he said, adding that there were “very dire predictions” about the impact of the pandemic on the Indian economy.

These fears regarding India do not appear to have materialized as the daily number of Covid cases in the country has decreased significantly since then. Analysts have also said the economic recovery has been stronger than expected.

Still, according to Hopkins, Indonesia has had the highest number of Covid-19 cases in Southeast Asia.

As of Wednesday, Indonesia recorded more than 1.11 million coronavirus infections while at least 30,770 people have died from Covid-19. Information from the country’s Ministry of Health shown.

Other factors

In addition to Indonesia’s relatively young population, JPMorgan also sees “positive efforts” to stimulate growth across Indonesia’s economy, Sullivan said.

The government is pushing for a mutual fund called the Indonesia Investment Authority. Reports suggest that Indonesian President Joko Widodo wishes this Raise up to $ 100 billion in funding.

Sullivan added that there has been a “significant recovery” in manufacturing, particularly in the export sector. In addition, the JPMorgan analyst cited the government’s vaccine efforts as another reason for its positive outlook.

Indonesia started a Covid-19 vaccination program in January Described by Reuters as one of the world’s largest campaigns. Of the country Finance Minister Sri Mulyani Indrawati recently told CNBC It will take at least a year for Indonesia to achieve “herd immunity” – which it does when large sections of the population become immune to the disease.

– CNBC’s Yen Nee Lee contributed to this report.

Indonesia will take not less than a 12 months to achieve Covid ‘herd immunity’: Minister

Pedestrians walk past a mural depicting Indonesia’s fight against the coronavirus pandemic in Jakarta on August 16, 2020.

Feature China | Barcroft Media via Getty Images

SINGAPORE – Indonesia will take at least a year for a sufficient portion of its population to be immune to Covid-19, the country’s finance minister Sri Mulyani Indrawati told CNBC, stressing that the government must continue spending to support the economy.

“We see that the pandemic is not waning and we need to remain vigilant,” Sri Mulyani told CNBC on Monday as part of reporting on Davos Agenda of the World Economic Forum.

Indonesia started its Covid-19 vaccination program Earlier this month after approval for an emergency Vaccine developed by China’s Sinovac Biotech.

Sri Mulyani said conservative estimates by experts showed it takes Indonesia about 15 months to vaccinate around 180 million people to reach “Herd Immunity.” This occurs when enough people in a population develop protection against a disease so that it can no longer easily spread.

We see the pandemic is not easing and we need to remain vigilant.

Sri Mulyani Indrawati

Finance Minister, Indonesia

But President Joko Widodo wants to “speed up” this process to achieve herd immunity within 12 months – which is a “daunting task,” said Sri Mulyani, given the geographic spread of the country. Indonesia is the world’s largest archipelago nation with around 250 million inhabitants on thousands of islands.

Meanwhile, Philippine Finance Minister Carlos Dominguez told CNBC – in a separate interview that is also part of the coverage of the Davos Agenda – that his country could vaccinate “the majority of the population” by the end of 2021.

The Philippines are slated to receive their first batch of Covid vaccines next month, Dominguez said. He hasn’t specified the source of these vaccines, however an Associated Press report The country expects 50,000 cans of China’s Sinovac to be shipped.

Government spending

Indonesia and the Philippines have the highest number of cumulative Covid cases in Southeast Asia, according to Johns Hopkins University.

Indonesia has reported more than 989,200 cumulative infections and over 27,800 deaths. While the Philippines recorded more than 513,600 cases and over 10,200 deaths, Hopkins data showed.

Dominguez said the Philippine government has provided funding for the country’s vaccination program, which is estimated to cost an estimated 82.5 billion Philippine pesos ($ 1.7 billion).

Similarly, Sri Mulyani said Indonesia would prioritize spending on vaccines as well as continued support for low-income households and small businesses. She added that the government had targeted a budget deficit of 5.7% of gross domestic product this year, which is below the previous year’s deficit of 6.1% of GDP.

The Indonesian finance minister said her country weathered the economic blow of the pandemic “relatively well” compared to many countries in the region and the G-20 ethnic group.

The economy is expected to shrink “the deepest” in 2020, around 2.2% before recovering to around 5% growth this year, she added.