BI Estimates The Global Economy To Slow Down, Here Are The Factors

Rupiah illustration (Photo: dock. Antara)

JAKARTA - Senior Deputy Governor of Bank Indonesia (BI) Destry Damayanti estimates that the global economy in 2024 will still slow down due to high geopolitical tensions to the direction of US monetary policy that must be watched out for.

"One thing is certain, there is enormous geopolitical tension globally, one of which is not only about Russia Ukraine, Israel Palestine, but it has spread to several other countries, so geopolitical tension is very large," he explained at the Bloomberg Technoz Economic Outlook 2024 event at the Westin Hotel, Jakarta, Wednesday, February 7, 2024.

According to Destry, Indonesia's economic condition will not be separated from the conditions that occur globally and even these conditions are interrelated with other countries.

In addition, Destry said there are several things to watch out for, namely the unresolved geopolitical tension, which is even more widespread, such as the geopolitical conditions of Russia Ukraine, Israel Palestine, and even now there are new tensions in the Red Sea which cause problems that cause disruption to the distribution of goods.

"Usually the flow of European-Asian goods goes directly through the Red Sea or the Suez Canal, but now it has to go around because there is a commotion in Yemen. Now it's 10-14 days more for the flow of goods," he explained.

Destry conveyed another factor that estimates that the Gobal economy will slow down, namely fragmentation or economic differences in several countries.

"America is growing better than other developed countries, while Europe is very heavy. In Asia, India is growing solidly but China is starting to subside a bit because there are property problems and so on," explained Destry.

According to Destry, another factor from the impact of the high interest rate that will occur in 2022 which will continue in 2023 will have an impact in 2024, so it is estimated that it will cause economic growth in 2024 to trend down for the global.

According to Destry, another sentiment is the gradual disinflation process. Where inflation that occurs in developed countries looks decreasing but the rate of decline is very slow.

"So we face a higher for longer environment. Global interest rates, we see for example the Fed Funds Rate, we estimate that only the second semester will go down. They still maintain high interest rates," he said.

As for these developments, according to Destry, it will make yields of United States (US) government bonds increase.

"The tenor of 10 years had dropped to 3 percent at the beginning of the year. But then because of the increased uncertainty at the end of January, it caused the bond yield to increase again now back above 4 percent," he said.