JAKARTA. Due to the turbulent economic situation, Bank Indonesia (BI) projects global economic growth in 2023 will weaken following the ongoing political tension and the aftermath of aggressive monetary policies of developed countries.
Perry Warijyo, Governor of Bank Indonesia, estimates that the global economic growth next year will arrive at 2.6% year-on-year (yoy), shrinking from 3% yoy estimated for 2022. “The global economic decline results from the fragmentation of economy, trading, and investment, as an effect of the ongoing political tension and the aftermath of aggressive monetary policies of developed countries,” he added yesterday (22/12).
According to Warijyo, despite its weakening state, the global inflation rate will still peak, driven by the disruption of global supply chain and the challenging condition in the labor market in the United States (US) and Europe. They will then force central banks to raise their interest rates. For instance, the Federal Reserves of the US is predicted to continue increase its reference interest rate until early 2023. “The cycle of monetary restriction will continue, although the amount may be smaller than predicted,” he stated.
In the meantime, the strong US dollar has held back foreign capital investment to any of the developing countries’ markets, including Indonesia. Warijyo said that this global economic downturn will trigger the risk of recession in several countries, such as the US and other European countries. (AM/ZH)