Stagnant Global Economy, Ministry Of Finance Says It Needs To Encourage Domestic Economy

Rupiah and US dollars (Photo: intermediate)

JAKARTA - The Director General of Financial Balance at the Ministry of Finance (Kemenkeu) Luky Alfirman also highlighted several projections from various financial institutions that show that global economic growth will be quite stagnant in 2024 and 2025.

In addition, Luky said that in addition to having to pay attention to global risks, it is also necessary to be aware of several other structural challenges such as climate change and technology, namely artificial intelligence (AI).

"We are also seeing several opportunities from this trend with global tensions, for example, there are several shifts, some changes in the global supply chain and also seeing the trend of global monetary easing, as well as the momentum of structural reforms," he said at the 2024 Fiscal Decentralization International Seminar, Tuesday, September 24.

According to Luky, the current global condition needs to encourage the domestic economy so that it can create a new growth engine. Where after the pandemic, Indonesia has shown its resilience by maintaining economic growth by around 5 percent.

Luky said this was reflected in economic growth in several regions driven by new policies issued by the government, not from previous downstreaming policies.

"Even with new sources of growth originating from outside Java, because of what is called a new policy, not because of resources or downstream policy. Regions such as Sulawesi, Papua, Maluku, have shown impressive growth above the growth rate," he explained.

However, Luky said the government was also wary of global conditions stemming from geopolitical conflicts, fragmentation, which had a negative impact on the global economy.

In addition, Luky added that it was related to the high interest rate policy for a longer time. Although some major central banks have started lowering interest rates such as the Bank of England, and recently the Fed.

"This is very good news. However, we must hope that there may not be drastic changes that will occur in the near future," he said.