The Government Asks To Focus On Keeping Purchase Day For Economic Risk Mitigation 2023

Illustration. (Photo: Doc. Antara)

JAKARTA - Economic observer from the University of Indonesia (UI) Yusuf Wibisono, assesses that the government needs to take a number of steps to mitigate risks in 2023, one of which is by maintaining people's purchasing power.

Being crucial for the government to concentrate on maintaining people's purchasing power by strengthening social assistance and social safety nets, as well as maintaining food and energy security," said Yusuf, Saturday, December 24. "The government should immediately focus on our large domestic economy, switching from export-led growth to domestic demand-led growth," he continued.

Previously, Coordinating Minister for Economic Affairs Airlangga Hartarto, said that Indonesia's economic challenges in the future continued to arrive and Indonesia had learned to face economic ignorance and uncertainty, especially when facing the COVID-19 pandemic. A number of international institutions have also cut Indonesia's economic growth projections in 2023. According to the Coordinating Minister for the Economy, Indonesia's economic growth is still in the range of 4.7-5 percent. This is a lesson for handling various risk uncertainties. Yusuf assessed that although the Indonesian economy is relatively less connected to the global economy, the relationship and impact of the global economy on the national economy cannot be underestimated. Especially through export-import routes and foreign capital flow channels.

"Export-import components in our economy contribute about 20 percent, the global recession will certainly weaken exports as one of the main machines of growth and become a savior in the post-pandemic recovery period," said Yusuf.

According to Yusuf, the weakening of exports followed by weakening foreign capital flows, both FDI and portfolio investments, will also weaken the rupiah exchange rate. Moreover, the outflow has the potential to increase along with the increase in benchmark interest in developed countries.

For monetary policy, Yusuf suggested, to maintain the rupiah exchange rate should no longer rely on interest rates. However, switching from a high interest rate approach to an effective foreign exchange management approach, especially through DHE repatriation (export result foreign exchange), natural resources and exchanging it effectively to the rupiah.

"The government must take a firm stance on exporters who do not repatriate the DHE into the country, including by making adjustments to the free foreign exchange regime," he concluded.