Bank Indonesia Beware Of Global Economic Uncertainty Remains High

Illustration (Photo: Doc. Antara)

JAKARTA Bank Indonesia (BI) is known to remain vigilant about the uncertainty of the global economy which is still high. BI Governor Perry Warjiyo said that global economic growth in 2023 is estimated at only 2.7 percent.

"This is influenced by China's slowing economic trend and the increasingly strong United States (US) economy," he said at a press conference today, Thursday, September 21.

According to Perry, China's economic slowdown was caused by a weakening of domestic demand due to consumer confidence, household debt, and property sector problems, amid a decline in exports due to a slowdown in the global economy.

Meanwhile, the strong US economy is supported by household consumption in line with wage increases and the use of savings excess savings.

"In that case, inflation in developed countries remains high due to continued pressure on service inflation, labor market tightening, and rising oil prices," he said.

Perry menjelaskan perkembangan tersebut mendorong tetap tinggi suku bunga kebijakan moneter di negara maju, terutama Federal Funds Rate (FFR) AS, yang mengakibatkan meningkatnya ketidakpastian pasar keuangan global.

"As a result, the pressure on the outflow and the weakening of the exchange rate in developing countries is getting higher, thus requiring a strengthening of the policy response to mitigate the negative impacts of the global rambatan, including in Indonesia," he stressed.

Meanwhile, Indonesia's economic growth remains well supported by domestic demand. He said household consumption is expected to grow strongly in line with the belief of the people who are still high, including the younger generation who increase service consumption.

"Investment performance remains good in line with the continued completion of the National Strategic Project (PSN)," he added.

Furthermore, exports slowed down in line with the weakening of global demand and the decline in commodity prices, amid strong service exports. Perry said that sectorally economic growth was also supported by several business fields in the service sector, such as wholesale and retail trade, transportation and warehousing, as well as the provision of accommodation and food and drink.

"The latest Bank Indonesia survey results also support this economic growth, such as high consumer confidence, positive retail sales, early indicators of Manufacturing Purchasing Managers' Index (PMI) in the expansion zone, as well as increased cement sales," he explained.

Perry said that the estimated economic growth in 2023 was in the projected range at 4.5 percent to 5.3 percent.

"Bank Indonesia continues to strengthen the synergy of government fiscal stimulus with macroprudential stimulus to encourage economic growth, especially in terms of demand," he concluded.