Bank Indonesia: The Global Economy is Declining Along with High Uncertainties

BI Governor Perry Warjiyo (Photo: Doc. Bank Indonesia)

JAKARTA – Bank Indonesia (BI) stated that the projection for the global economy is believed to decline accompanied by high uncertainty.

BI Governor Perry Warjiyo said global economic growth in 2023 would still slow down as predicted with a high risk of recession in several countries, including the United States (US) and Europe.

"The global economic slowdown was affected by economic fragmentation, trade, and investment due to continuing political tensions and the impact of aggressive monetary policy tightening in developed countries", he told reporters via digital channel on Thursday, December 22.

According to Perry, Bank Indonesia believes the world economy will grow by 3 percent in 2022 and decrease to 2.6 percent in 2023.

"Meanwhile, inflationary pressure is still high, although it has begun to decline, influenced by continuing supply chain disruptions and a tight labor market, especially in the US and Europe", he said.

Perry added inflation is still high pushing global monetary policy to remain tight. He said the US central bank The Federal Reserve (The Fed) is considered to be again raising the Fed Funds Rate until early 2023.

"The reading is in keeping with a long cycle of monetary policy tightening, albeit at a lower magnitude", he stressed.

Furthermore, the BI boss also said that future developments would still be colored by the continued strength of the US dollar.

"There is a possibility that there will still be high uncertainty in global financial markets which will then have an impact on the weak capital inflows to developing countries, including Indonesia", concluded Governor Perry Warjiyo.