BI Predicts The Global Economy To Slow Down In 2024

Photo: Aris Nurjani/VOI

JAKARTA - Bank Indonesia (BI) estimates that global economic growth will slow down in 2024 with financial market uncertainty starting to subside.

BI Governor Perry Warjiyo said Bank Indonesia estimates global economic growth in 2023 to be 3.0 percent and slow down to 2.8 percent in 2024.

The world economy will slow down, along with financial market uncertainty. Although, it seems to have subsided," Perry said at a press conference, Thursday, December 21.

Perry also explained that the economic growth of the United States (US) and India in 2023 was better than the initial estimate, supported by household consumption and expansion of government spending.

Meanwhile, China's economic growth is believed to weaken along with household consumption and limited growing investment.

Meanwhile, inflation in developed countries, including in the US, is in a downward trend but the rate is still above the target. The monetary policy interest rate, including the Fed Funds Rate (FFR), is expected to have peaked but will still last a long time.

Likewise, the yield or yield of government bonds for developed countries, including the US Treasury, is expected to still be high in line with the long-term risk premium (term-premia) related to the amount of fiscal financing and government debt.

Perry conveyed that the clarity of the direction of monetary policy in developed countries has pushed for the easing of global financial market uncertainty.

"In this regard, the capital flow has so far started to re-enter and reduce the pressure on the weakening of the exchange rate in emerging markets, including Indonesia," he explained.

In the future, Perry said a number of risks could again increase the uncertainty of the world economy, including continued geopolitical tensions, weakening the economy in a number of countries including China, as well as still high monetary policy interest rates and bond yields in developed countries.