Bank Indonesia: World Economic Growth Potentially Higher Than Estimated

Illustration. (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) estimates that world economic growth has a higher potential in 2023 than the previous forecast of 2.3 percent.

"Global economic growth has the potential to be better than the forecast with the elimination of Zero Covid Policy in China," said BI Governor Perry Warjiyo in the Announcement of the Results of the Board of Governors' Meeting (RDG) of BI February 2023, quoted from Antara, Friday, February 17.

Perry said China's economic growth has the potential to be higher with increasing domestic demand in line with China's economic opening after the elimination of the Zero Covid Policy. The economy of the United States (US) and Europe is expected to slow down with a high risk of recession.

In addition, he said world inflation has decreased gradually due to the slowdown in global economic growth and improvement in supply chain disruptions, although it remains at a high level as energy and food prices have not decreased significantly and labor markets, especially in the US and Europe, are still tight.

The sloping inflation is expected to push monetary policy strictly in developed countries near its peak, with interest rates expected to remain high throughout 2023.

In addition, the uncertainty of the world financial market has also eased so that it has an impact on increasing global capital flows to developing countries. The pressure on exchange rate depreciation in these countries has also decreased.

Previously, in the announcement of the results of the BI RDG January 2023 on January 19, 2023, BI lowered the projected 2023 world economic growth to 2.3 percent from the previous estimate of 2.6 percent.

The global economic growth, which has slowed down from previous forecasts, was caused by political and economic fragmentation that had not yet ended and the tightening of aggressive monetary policy in developed countries.

The correction to economic growth projections was also accompanied by increased risks of potential recession in the United States (US) and Europe.