Recent international events have led the world into an economic crisis. Some countries are on the brink of recession, some are even declared bankrupt. Otherwise, Indonesia will be in a different direction, with an economic projection of around 5%.
This was revealed by the Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva last weekend.
Several reasons keep Indonesia from recession. Among other things, proper handling of COVID-19 and preventing a deep economic downturn.
“When Covid-19 is here, Indonesia has managed to prevent a significant decline in economic output, not as deep as in many places,” said Georgieva.
Despite facing the effects of the Russian war in Ukraine, Georgieva said Indonesia continued to record positive growth, which she believes will continue to grow well.
“(Indonesia) is facing a second shock in the war in Ukraine by recording economic growth above 5%, with inflation at 4%, and with a very good budget that can provide support, especially to the vulnerable population,” she said.
This figure itself, according to Georgieva, is much lower than other countries in the world, so she feels proud of Indonesia’s achievements.
In addition, he also said it was very important for Indonesia’s fiscal policy to remain focused on providing targeted assistance. He said the government should focus on those who really need it, not provide subsidies to everyone, including the rich.
“Why? Because if fiscal policy spends too much, it can blow up inflation,” She added.
He also assessed Indonesia’s policy of burden sharing through cooperation between the government and Bank Indonesia.
“During the Covid-19 crisis, Indonesia’s central bank, Bank Indonesia (BI), provided some monetary support in collaboration with the government with a decision to deal with it by the end of 2022, and we strongly recommend that this decision be respected, once again, to protect the economy from shocks. world,” she said.
Although there is no recession, the deteriorating condition of the world economy still affects Indonesia. The endless war between Russia and Ukraine has hampered food supplies around the world. The result is a spike in inflation.
“If inflation gets out of control and the government doesn’t continue its preventative policies, that will be a surprise that we have to avoid,” Georgieva said.
So the government must try to reduce the surge through various policies, to ensure the availability of supply and fiscal and monetary optimization.
“Our recommendation: one, when inflation is high, fight it and reduce it,” She added.
Second, said Georgiva, is to provide financial support to the economy if needed. Third, cooperate with many parties for economic recovery.