Sri Mulyani: Global Economic Growth Will Be Stagnant At 3.2 Percent

Minister of Finance Sri Mulyani. (Photo: Doc. ANTARA)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani said that global conditions are not yet good.

In fact, he said, global economic growth this year will stagnate at 3.2 percent.

The forecast cites the latest report by the World Economic Outlook published by the International Monetary Fund (IMF) in April 2024.

"Global economic growth is expected to be relatively stagnant with various developing risks and challenges," he said in a virtual presentation of the results of the quarterly meeting of the Financial System Stability Committee (KSSK), Friday, May 3.

Sri Mulyani said the United States (US) economy grew at the level of 2.5 percent on an annual basis or year on year (yoy) for 2023 and will still strengthen in 2024. He said this was driven by the strengthening of domestic demand and US manufacturing activities.

The strong economic performance of the United States was followed by a high inflation rate and increased in recent months, which has prompted the Fed's potential delay in cutting the benchmark interest rate. This means that a higher for longer will occur in the United States," he said.

Meanwhile, continued Sri Mulyani, it is estimated that China's economy will slow down from 5.2 percent yoy in 2023 to 4.6 percent in 2024.

"In April 2024, the dynamics of the global financial economy will change very quickly with a negative trend. Due to the escalation of the war in the middle east and also the increasing geopolitical tension," he explained.

Then, continued Sri Mulyani, it was also influenced by the United States' monetary policy which tends to maintain higher interest rates longer, higher for longer, and delays in cutting interest rates from the Fed Fund Rate.

"As well as the high yield from the US Treasury has caused portfolio capital flows out of developing countries and emerging to move to the United States. And this has led to the strengthening of the US dollar and the weakening exchange rate of various currencies from various countries," he said.