Global Economy Is Getting Gloomy, BI Cuts Growth Projection To 2.3 Percent

JAKARTA – Bank Indonesia (BI) stated emphatically that global economic growth will further slow down than previously estimated. This was conveyed directly by BI Governor Perry Warjiyo to the media crew in his office.

According to Perry, this assumption is based on unfinished political and economic fragmentation and aggressive monetary policy tightening in developed countries.

"The correction to the projected economic growth is quite large and is accompanied by an increased risk of a potential recession in the United States (US) and Europe," he said on Thursday, January 19.

Even so, Perry said, there is little hope that can be seen in the next year. It was stated that the support came from important economic players in Asia.

"The elimination of the Zero-Covid Policy (Zero Covid Policy) in China is expected to halt a slowdown in global economic growth," he said.

As a whole, Bank Indonesia lowered its world economic growth projection for 2023 to 2.3 percent from the previous estimate of 2.6 percent.

"Global inflationary pressure is starting to ease in line with slowing global economic growth, although it remains at a high level in line with high energy and food prices, continuing supply chain disruptions, and still tight labor markets, especially in the US and Europe," he explained.

Perry added, in line with sloping inflationary pressures, monetary policy tightening in developed countries is approaching its peak with interest rates expected to remain high throughout 2023.

“Uncertainty on global financial markets has also begun to subside, resulting in an increase in global capital flows to developing countries. The pressure of weakening exchange rates in developing countries has also reduced," he said.