JAKARTA Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar believes that economic travel, especially globally, throughout 2023 will be colored with various dynamics. According to him, there are a number of indications that will cause a challenging future period.
Mahendra revealed that there are at least two possibilities that could occur, namely the world economy will experience soft landing or hard landing. It was stated that the pair of predictions did not have a significant impact on economic improvement.
"I think we have no doubt that the global conditions next year are likely to be soft landing or hard landing," he said while speaking at the 2023 Indonesia Economic Outlook forum on Wednesday, December 21.
Mahendra explained that the condition of smooth landing means a slowdown in economic growth accompanied by an inflation rate that is still at the top level.
"So the economy weakened with inflation that was still there (high) but starting low from now on," he said.
Meanwhile, for hard landing means that economic growth continues to fall at the lowest limit with inflation rates that tend to be higher.
In fact, it can be a worst scenario, namely a crash landing. That's a combination of stagflation. The (growth) economy is stagnant or even lower below 0 percent with high inflation. So the possibility (next year) is between soft landing and crashing, "he said.
Mahendra himself stated that his party continues to encourage the business world, which has strong profitability in 2022, to prepare for the worst in the 2023 business year.
To those who do have high profits, some (profits) must be used to strengthen reserves. Don't get carried away with euphoria by distributing dividends. Later when you need funding in a heavier condition, it doesn't even exist. This needs to be maintained," he explained.
As is known, a number of countries in the middle of the world are facing a surge in inflation due to rising commodity prices caused by supply chain disruptions. One of the most powerful ways to control inflation is through rising benchmark interest rates in their respective countries.
Even so, the rising interest rate is believed to hamper the recovery and economic growth due to the increasing cost of funds (cost of funds). As a result, the business sector is reluctant to withdraw banking funds which results in hampered business expansion and weakening the wheels of the economy.
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