OJK Boss Reveals The Condition Of Indonesia's Sustainable Services Amid Global Dynamics Conditions

Chairman of the OJK DK Mahendra Siregar (Photo: Antara)

JAKARTA - Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar revealed that the stability of the national financial services sector is well maintained, driven by strong capital, adequate liquidity, maintained risk profiles, so that it is expected to face the potential for a global economic slowdown.

"Economic indicators globally show moderation or slowdown in growth in several countries, especially in EU and Chinese countries," he said in a virtual RDK Press Conference, Tuesday, January 9, 2024.

In addition, Mahendra said the slowdown in economic growth pushed inflation down close to the inflation target, thus providing space for the world's central bank to be more accommodative after the decline in inflation.

"In the United States (US), the Federal Reserve (The Fed) signaled that it would lower interest rates by 75 basis points (bps) in 2024," he said.

Mehendra added that the market assesses that the US economy is still quite resilient and is not expected to experience a recession.

"However, the market is also observing future geopolitical developments such as the escalation of red sea tensions due to the Palestinian conflict in Israel, as well as the holding of elections that cover 50 percent of the world's population, including in the US, European Union, India, Taiwan, and Indonesia," he said.

Mahendra assessed that global financial market sentiment tends to be positive in December 2023. This is supported by expectations of lowering the Fed interest rate and the narrative of the US economic soft landing, thus encouraging inflows into emerging markets and strengthening capital markets, including Indonesia.

Mahendra also said that there was a decline in volatility in both the stock market, debt securities and exchange rates driven by positive national economic indicators, as reflected in the trade balance which was in a surplus and the Manufacturing Purchasing Managers' (PMI) which was still expansionary. And the inflation rate was also maintained low at the level of 2.61 percent year on year (yoy) compared to November 2023 at 2.28 percent.

"We still need to pay close attention to the development of domestic demand going forward as core inflation continues to decline, decline in consumer optimism, and decline in sales growth in retail and motorized vehicles," he said.