JAKARTA Minister of Finance (Menkeu) Sri Mulyani said global economic conditions are still facing a number of challenges in the midst of the current recovery phase. According to her, this is reflected in the global Manufacturing Purchasing Managers' Index (PMI) which contracted again at the end of the first quarter of 2023.
"Manufacturing activities in almost 60 percent of G20 and ASEAN 6 countries are still contractive, 27.3 percent of other countries are in the expansion zone but slow down, while only 13.6 percent of countries whose Manufacturing PMI continues to accelerate in the expansion zone including Indonesia, India, and Turkey," he said after the APBN presentation, quoted Tuesday, April 18.
The Minister of Finance explained, in general, global commodity prices are moderated. Natural gas and coal prices show a downward trend, while crude oil prices have increased as a result of the implementation of the policy of cutting oil production by OPEC.
"Food commodity prices also show a decline, although soybeans are still at a fairly high level, while corn and wheat are slightly corrected," he said.
It is stated that commodity price volatility is still an important factor that affects the inflation rate and monetary policy of countries. The inflation rate in Europe and Japan has increased and is still relatively far above the benchmark interest rate.
"The inflation of the United States, although it has decreased, has historically also been high. The increase in inflation has been responded to by many countries by raising the benchmark interest rate, hitting the economy quite sharply this year," he stressed.
Meanwhile, other global risks that are still quite dominant include pressure in the financial sector, potential debt crisis in various countries (debt distress), escalation of war in Ukraine, and geoeconomic fragmentation.
The Minister of Finance said this made the IMF lower its expectations for global economic growth this year at the World Economic Outlook (WEO) April 2023, which was 2.8 percent year on year (yoy), slightly weaker than the projected beginning of the year, but higher than last year's projections.
The state treasurer added that although this year the global economy is slowing down, global growth is expected to improve in 2024 (IMF project of 3.0 percent yoy.
Indonesia in the context that its economic growth, momentum is still maintained, all indicators show an improving trend, and this is also influenced by Fiscal performance. In this case, we also maintain the state budget to maintain good performance and position, that is something we must maintain and be grateful for," he concluded.
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