OJK Reveals Stable Financial Services Sector Supported By Strong Capital

Chairman of the OJK DK Mahendra Siregar (Photo: Doc. VOI)

JAKARTA - The Financial Services Authority (OJK) revealed that the financial services sector is still stable, supported by a strong level of capital, and adequate liquidity amid global uncertainty due to increasing geopolitical tension and slowing down the global economy.

Chairman of the OJK Board of Commissioners, Mahendra Siregar, said global economic growth was still weakening, with inflation being moderated accompanied by cooling down labor markets in the United States (US), amid market expectations for lower policy rates from the US Central Bank in 2024.

"In Europe, economic indicators are not solid, amid inflation and market expectations of lowering the Central Bank interest rate in September 2024," Mahendra said at a press conference on the results of the monthly RDK OJK meeting in August 2024, Friday, September 6.

Mehendra said that in China, which is the second largest economy and Indonesia's main trading partner, experienced slowing economic growth, with decupling between demand and supply continuing.

Then, Mahendra said global geopolitical tensions continued to increase, in line with the high political dynamics in the United States ahead of the presidential election, as well as potential instability in the Middle East and Russia, due to the continuing war in the two regions.

Furthermore, Mahendra said that the weakening of demand globally also caused commodity prices to weaken.

"In the midst of this development, which is driven mainly by the expectations of a reduction in interest rates by the Fed in the near future. The majority of emerging market financial markets have strengthened, especially in the bond market and the exchange rate," he said.

Mahendra said that in the domestic market the economic performance is still quite positive and tends to be stable, with the core inflation rate maintained with a surplus trade balance. However, it is necessary to observe the relatively slow recovery of purchasing power at this time.

In the midst of high uncertainty due to the escalation of global geopolitical tensions, Mahendra OJK remains aware of these risk factors and the potential impact of its propagation on the financial services sector.

According to Mahendra, amid the high uncertainty due to the escalation of global geopolitical tensions, OJK remains aware of these risk factors and the potential impact of its propagation on the financial services sector.

"In order to take anticipatory steps and ask the industry to monitor downside risk periodically and take necessary mitigation steps, such as providing adequate buffers, and carrying out periodic resilience tests," said Mahendra.