Indonesia suffered its first recession in over two decades as the COVID-19 pandemic hit consumption and business activity, costing millions of jobs, the statistics bureau said on Thursday.

Gross domestic product (GDP) shrank by a slightly more than expected 3.49% year-on-year as household consumption and investment fell in the third quarter, official data showed. Economists in a Reuters poll had expected GDP to decline 3% after a 5.32% contraction in the second quarter.

Finance Minister Sri Mulyani Indrawati told a news conference the “the worst is over” pointing to a sharp rebound in quarterly GDP in the July-September period.

But a separate statistics bureau survey showed some 2.6 million people had lost jobs in the year to August due to COVID-19, pushing the unemployment rate to a nine-year high of 7.07%.

A 9.8% rise in government spending helped soften the blow, but economists called on more stimulus to lift the economy.

“The government will focus on further accelerating economic recovery and returning to positive economic growth,” said Sri Mulyani, adding authorities would boost spending in the fourth quarter. The rupiah and the main stock index briefly pared gains after the data.

Indonesia’s first recession since the Asian financial crisis in 1998 - normally defined as two consecutive quarters of economic contraction - comes as the country has struggled to contain the coronavirus outbreak. It has the highest caseload and COVID-19 death toll in Southeast Asia.

Indonesia introduced restrictions to contain the spread of the virus earlier this year, many of which were lifted in June, but the government imposed a second round of curbs in Jakarta for a month in September.

Household consumption, normally the economy’s main growth engine, fell 4% on an annual basis in the third quarter, while investment dropped 6.5% and exports tumbled 10.8%.

GDP grew a non-seasonally adjusted 5.05% quarter-on-quarter, up sharply from a 4.19% contraction in the second quarter but below a 5.34% forecast in the Reuters poll.

The government had spent 52.8% of its 695.2 trillion rupiah ($48.3 billion) pandemic-relief budget year-to-date, official data showed.

“Given the unfathomably slow pace of fiscal stimulus disbursement ... the pressure is on monetary policy to do more,” said Wellian Wiranto, economist with OCBC.

Bank Indonesia (BI) Governor Perry Warjiyo has said the central bank has further room to act after 100 basis points of rate cuts this year and more than $30 billion of government bond purchases. BI’s next monetary policy review is scheduled on Nov. 18-19.

The data comes after thousands of people took to the streets in the youthful nation in October calling for the reversal of a controversial law aimed at job creation that protesters say comes at the expense of the environment and labour.

David Sumual, an economist at Bank Central Asia, said the recession was unlikely to trigger social unrest due to the increase in social spending for the most affected communities.

Indonesia will see a significant boost in trade and investment from the United States as a result of Washington’s renewed trade preference facility with Southeast Asia’s largest economy, a top Indonesian official said on Sunday. “The ambition of the government is to double (US-Indonesia) trade in the next five years to $60 billion, while simultaneously encouraging US investment,” said vice foreign minister Mahendra Siregar, who noted this came after over two years of negotiations.

The Office of the United States Trade Representative (USTR) said on Friday it had closed Indonesia’s eligibility review for access to the Generalized System of Preferences (GSP) facility, with no loss of previous benefits.

The GSP programme gives privileged trade status to developing economies.

Total two-way trade with the United States was worth $28.6 billion last year, according to Indonesian trade ministry data.

Mahendra told a press conference that the US International Development Finance Corporation (DFC) was also “very interested” in investing in the country’s upcoming $5 billion sovereign wealth fund.

Meanwhile, stocks and currencies in Asia’s emerging markets rose on Thursday as Democrat Joe Biden pulled ahead of Republican rival Donald Trump and was within striking distance of clinching a nail-biting US presidential election.

The Democratic candidate is widely seen as likely to be less combative on trade policy and in relations with the region’s growth engine China, and investors hope that it may clear the way for Asia’s stronger recovery from the coronavirus crisis.