The Earth Shakes Up! Bank Indonesia Cuts Economic Growth Target To 4.5 – 5.3 Percent

Governor of Bank Indonesia Perry Warjiyo (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) revised the national economic growth protection for 2022 to 4.5 percent to 5.3 percent from the previous 4.7 percent to 5.5 percent.

BI Governor Perry Warjiyo said that this step was in line with Indonesia's latest macroeconomic conditions as well as the external situation happening globally.

"The latest assessment shows that our economic growth pattern has indeed changed due to the impact of geopolitical tensions between Russia and Ukraine," he said when giving a press statement to the media crew online on Tuesday, April 19.

In his explanation, Perry revealed that the assumption was based on several things. First, indications of pressure on Indonesia's foreign trade, which has tended to be depressed since the outbreak of war in Eastern Europe.

“From the real side of export volume, initially it happened quickly and high before the political tension. Then our current readings show gains being held back as our trading partners point to a downturn in the economy. So, from the demand side, growth has been restrained," he said.

Second, the still volatile world political situation has put supply chain activities in a state of uncertainty.

"Besides that, there are still disruptions in the global chain and because of that it also causes domestic demand to experience pressure from the export volume," he stressed.

Despite making cuts to economic growth, Perry assessed that the level set was still quite high in the midst of the current dynamics.

"It's still high, but certainly not as high as before. Through the assessment, the increase in demand was slightly lower than expected. Therefore, the negative output gap is getting bigger and this of course explains the fundamental side with core inflation pressures being relatively low," concluded BI Governor Perry Warjiyo.