IMF Sends Good 'Parcel' from America, RI's Economy is the Most Solid in Facing Global Risks

Illustration (Photo: Doc. Ministry of Finance)

JAKARTA - The Ministry of Finance (MoF) reports that the International Monetary Fund (IMF) projects Indonesia's economy to be one of the most solid in the midst of a global slowdown.

This was conveyed by the Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Kacaribu, who is participating in the IMF-World Bank Spring Meetings 2023 agenda in Washington DC, United States of America this week.

It stated that the IMF revised up Indonesia's economic growth for 2023 from 4.8 percent to 5.0 percent. This positive signal continues with an estimate of 5.1 percent for 2024.

"The increase in the projected economic growth by the IMF shows that Indonesia is still one of the bright spots in the midst of a global situation full of uncertainty," he said in a written statement on Friday, April 14.

According to Febrio, the Indonesian economy continues to demonstrate resilience and strengthening with the Manufacturing PMI consistently on an expansionary path for 19 consecutive months. This condition is in contrast to the global Manufacturing PMI which is still in the contractive zone.

Then, Febrio said the retail sales index and consumer confidence were still high, with relatively moderate inflation at 5 percent

"This was also supported by the trade balance which recorded a surplus for 35 consecutive months. In line with the positive rotation of the economic wheel, state revenues grow well together with higher quality state spending," he said.

Febrio added, the government is still keeping prices of basic necessities stable in order to maintain the momentum of economic recovery and people's purchasing power.

For information, the IMF estimates that the global economy will slow down from 3.4 percent in 2022 to 2.8 percent in 2023. Then, it will improve to a level of 3.0 percent in 2024.

The momentum for strengthening the recovery that had occurred at the beginning of the year has now faded due to the turmoil in the financial sector in the United States and Europe and persistently high inflationary pressures. Meanwhile, the projected global inflation for 2023-2024 rose to 7.0 percent and 4.9 percent.

"The failure of the US and European banking systems adds uncertainty to the outlook for the two regions which are already under heavy pressure from inflation and aggressive monetary tightening," he stressed.

Meanwhile, India is projected to grow 5.9 percent (2023) and 6.3 percent (2024), and China is projected to grow 5.2 percent (2023) and 4.5 percent (2024).

“Going forward, the IMF sees various risks to the global economy as still dominant with the potential for a hard landing if the risks escalate. The main risks come from pressure on the financial sector, debt pressure, the escalation of the war in Ukraine which could trigger an increase in commodity prices, persistently high core inflation rates, and geoeconomic fragmentation," he said.

"Going forward, the Indonesian government will continue to implement policies that are anticipatory in dealing with global economic turbulence while still overseeing medium-long term development plans, including through structural reforms," ​​concluded Febrio.