Sri Mulyani Says The Global Economy Is Still Full Of Challenges

Minister of Finance Sri Mulyani. (Photo: Aris Nurjani/VOI)

JAKARTA - The Financial System Stability Committee (KSSK) said Indonesia's financial system in the third quarter of 2023 was still stable even though in the midst of a global economy full of challenges and dynamics in the global financial market.

Minister of Finance (Menkeu) Sri Mulyani Indrawati said that global economic growth is expected to slow down due to high uncertainty accompanied by widespread divergences between countries.

"Global economic growth has slowed down with increased uncertainty, also accompanied by divergences or widening growth differences between countries," Sri Mulyani explained at a press conference in Jakarta, Friday, November 3.

In addition, the International Monetary Fund (IMF) estimates the global economy will reach 3 percent by 2023 and slow down in 2024 to 2.9 percent.

This is influenced by the development of several developed countries. Such as the economy in the United States (US) which is expected to still grow supported by consumption and the service sector. Meanwhile, China will experience a slowdown due to the weakening of consumption and crisis in the property sector.

According to Sri Mulyani, inflation is expected to still be high driven by an increase in food energy prices due to geopolitical escalation, economic fragmentation, and the phenomeena of El Nino.

"To control inflation, the interest rate of monetary policy in developed countries including the Fed Fund Rate (FFR) is estimated to remain at a high level in a longer period of time or a higher for longer," he said.

Sri Mulyani said that the increase in inflation would still be accompanied by an increase in the yield of bonds for developed countries, especially the US for debt financing needs.

"This triggers foreign capital outflows from emerging markets to developed countries, thus encouraging significant strengthening of the US dollar into various currencies in the world," he explained.

He said that the Indonesian economy is expected to be maintained and stable driven by private consumption, which is expected to grow strongly, as reflected in the still high consumer confidence index (IKK), controlled inflation, and activities related to the 2024 election.