Fasten The Belt! BI Says The 2023 Economic Oscillations Are Believed To Be GREATer

Illustration (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) stated that global economic growth in 2023 will be slower than 2022 with various potential pressures emerging.

BI Governor Perry Warjiyo said that several things that need to be watched out for are the high level of inflation, the aggressive increase in monetary policy interest rates, and the continuing uncertainty in financial markets.

"Global economic growth in 2023 is expected to decline from 2022, with the risk of corrections that can be lower and a high recession in several countries, including the United States (US) and Europe," he said after holding a Board of Governors Meeting some time ago.

According to Perry, the global economic slowdown was affected by continued geopolitical tensions that triggered economic fragmentation, trade and investment, as well as the impact of aggressive tightening monetary policy.

"Meanwhile, global inflation and core inflation pressures are still high in line with continued supply chain disruptions and labor market tightening, especially in the US and Europe, amid weakening global demand," he said.

In response to the high inflationary pressure, Perry continued, central banks in many countries continue to strengthen the tightening of aggressive monetary policy.

"The increase in the Fed Funds Rate, which is estimated until early 2023 with a longer cycle (higher for longer), has kept the US dollar strong, thus putting pressure on the weakening of the exchange rate in various countries," he stressed.

Perry said, the pressure on the weakening of the exchange rate is increasing in line with the high uncertainty in global financial markets.

"The flow of foreign portfolio investment increases the pressure of the exchange rate in developing countries, including Indonesia," he concluded.