Indonesia Has Strategic Steps to Face Economic Crisis

Indonesia's Traditional Market

The economic crisis looms over Indonesia. This can be seen in rising inflation and fuel prices. However, Indonesia has strong capital in dealing with the financial crisis that may occur shortly. This will be optimized by the government.

According to Finance Minister Sri Mulyani, Indonesia’s domestic demand is quite high. She said during a working meeting with the DPD RI, quoted on Thursday (9/6/2022), “If next year there is a world recession, maybe Indonesia’s growth will be affected as well for sure.”

According to Sri Mulyani, domestic needs to be strengthened to face high external uncertainty.

Domestic demand in question includes household consumption, which accounts for half of the economy. Therefore, inflation is one thing that must be controlled, both from food and energy sources.

The energy side is anticipated by increasing subsidies for fuel oil (BBM), 3 kg LPG and electricity by Rp 520 trillion. So that people do not need to be burdened by price increases experienced by many other countries. Inflation this year and 2023 is expected to be maintained at the level of 2-4%.

The government also provides additional social assistance (bansos) to people in need. Where this year the addition reached Rp 18.6 trillion. “So our focus is to maintain people’s purchasing power,” said Sri Mulyani.

However, the government also does not ignore the health of the state budget. A large world shock must be anticipated by a sound state budget, meaning that the budget deficit is strived to continue to fall.

The 2022 state budget deficit is estimated to reach 4.50% of GDP or IDR 868 trillion, lower than the previous 4.8% of GDP or IDR 840.2 trillion. Meanwhile, in 2023 it is estimated to be below 3% of GDP. “The state budget must also remain healthy so that it can become a stabilizer,” concluded She.

Previously known, Economic developments around the world are showing a downward trend. This was caused by several international sentiments. The Russia-Ukraine war never ended and the Fed’s monetary policy was said to have caused chaos in the world economy, especially in the fuel oil price.

Indonesia is one of the affected countries. This has been proven by inflation that is still happening. Moreover, there is news that the price of fuel oil will also rise.

Therefore, the President of Indonesia, Joko Widodo, strongly requests that the price of fuel oil not increase as well as the prices of other commodities. This must be done so that Indonesia avoids economic crisis.