Sri Mulyani: International Institutions In Competitions To Create Suram Economic Projections In 2023

Minister of Finance Sri Mulyani Indrawati. (Photo: Doc. Antara)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani assessed that all parties view Indonesia's external conditions as very uncertain when entering 2023.

"In fact, various international institutions are competing to create projections that make it even more gloomy," Sri Mulyani said at "BRI Micro Finance Outlook 2023", quoted from Antara, Thursday, January 26.

This uncertainty is not without reason because the trend of increasing global interest rates is taking place, in which there is an increase in the benchmark interest rate of 450 basis points (bps) to 500 bps in less than 12 months.

The high increase in interest rates, said Sri Mulyani, will certainly suppress various economic sectors, resulting in many phenomena, especially during the high inflation rate.

In addition to monetary policy that tends to be strict with high interest rates and increased inflation, there is also an outflow trend that adds to uncertainty, especially in developing countries (emerging markets).

The issuance of foreign capital is a shock in itself for the exchange rate in developing countries, plus the condition of the US dollar which has become relatively very strong lately.

Therefore, he argues that the situation is shaking globally in the financial sector in the form of cost efficiency (Cost Of Fund/CoF) and there are risks from the side of currency, inflation, and interest rates, resulting in a possible recession in Europe and America.

"If the world's economic driving force, namely America and Europe, will be recession while China is also in a situation that suddenly opens up the economy, this is what causes a lot of dynamics for Indonesia to be aware of," he said.

This vigilance, continued the Minister of Finance, especially from one of Indonesia's sources of growth, namely exports that cannot be denied have a very important role.

Nevertheless, Indonesia still has a large domestic market as the country with the largest economy in ASEAN, so that it can become a buffer or compensation for an unpleasant global environment.