Facing Global Economic Pressure, Economists: Indonesia Is Sufficient To Maintain The Domestic Economy

Segara Institute Executive Director, Piter Abdullah. (Photo: Doc. Antara)

JAKARTA - Segara Institute's Executive Director, Piter Abdullah said, the government does not need to make extra efforts by adding policies related to the severity of global economic prospects.

However, the condition is that the government is able to maintain the domestic economy.

"How to keep the domestic economy uninterrupted, because the domestic economy is recovering. And in the midst of global conditions, our mainstay is domestic demand. Therefore, the domestic market should not be disturbed," Piter said, Wednesday, November 23. Pirer said President Joko Widodo's statement to be careful in making policies is part of the warning. "No official said we will experience a recession, a gloomy condition. However, there is a common view that we must be careful. The global condition is indeed tough, so we must be careful. Because after all, we can be affected if we don't make the right decisions," he said.

Piter also assessed that the action of Bank Indonesia (BI) to raise the benchmark interest rate by 50 basis points to 5.25 percent was considered the right step.

"In fact, the increase in interest rates is also to reduce inflation, not only reducing the weakening of the exchange rate. But rising interest rates can also reduce inflation, because it means tightening demand, reducing demand, in order to reduce inflationary pressures," said Piter.

The global economic outlook is predicted to slow down and influence Indonesia. This has been repeatedly conveyed by government officials. Not only President Joko Widodo but also Coordinating Minister for the Economy Airlangga Hartarto and Minister of Finance Sri Mulyani.

This time, the Governor of Bank Indonesia (BI) Perry Warjiyo also spoke about this condition.

According to Perry, the world faces risks that can create economic turmoil, both in the remainder of this year and next year. The key to dealing with these turmoil is synergy and coordination. "Synergy, synergy, synergy. Coordination, coordination, coordination. Coordination must be tight," Perry said. Need Synergy

Meanwhile, Economist from the Institute for Development of Economics and Finance (Indef) Nailul Huda revealed, the most important thing in dealing with global economic turmoil is the synergy between monetary and fiscal policies.

"The synergy of monetary and fiscal policies is important, considering that the condition of the global recession is getting closer to reality," said Nailul.

According to Nailul, fiscal and monetary policy instruments should also be focused on maintaining inflation at a balance point.

"Inflationary balances are important where inflation must be maintained so that it is not too high with monetary and fiscal instruments," he added.

From the monetary side, Nailul said, the increase in the benchmark interest rate is considered to be able to control inflation, but has an impact on the slowing economy.

Meanwhile, from the fiscal side, stock instruments must be carried out to control domestic commodity prices.

According to Nailul, BI has taken a role by raising interest rates, so now it is the government's duty to carry out fiscal policies.

"That's why Pak Perry emphasized synergy because BI has raised the benchmark interest rate many times. It's up to the executive government from the fiscal side," he said.