Based on a report from the World Bank, Indonesia’s economic growth is predicted to increase to 5.1% in 2022. There is a significant increase after the country’s economy was recorded at 3.7% in 2021.
If the World Bank predictions come true, Indonesia’s economic growth this year could overtake China’s. The country is expected to experience 4.3% growth.
In fact, the Indonesian economy could be a little higher. But global shocks held back 0.1% growth.
Furthermore, the United States (US) economy has also experienced a decline this year. In 2021 it was 5.7% then dropped to 2.5% in 2022.
The US economy slowed down due to a spike in inflation that occurred in recent times and was responded to by an increase in the benchmark interest rate.
Europe experienced a slowdown, from 5.4% to 2.5%. Russia to -8.9% from 4.7% previously. Turkey 11% to 2.3% and Poland from 5.9% to 3.9%. While India from 8.7% to 7.5%.
Drastic declines also occurred in Brazil and Mexico. This year, the economy is forecast to grow just under 2%. Meanwhile, Argentina’s economy grew by 4.5% from 10.3% in the previous year.
Several factors cause the economic slowdown. This is due to the spread of Covid-19, changes in the direction of monetary policy, supply chain barriers, the war between Russia and Ukraine, and inflation.
Previously, Indonesia’s economic growth projection in 2022 was corrected by the World Bank. The previous growth projection of 5.2% has now been corrected to 5.1.
In a recent report, the World Bank estimates that growth in most emerging markets and emerging economies is expected to slow sharply this year.
This was mainly due to the impact of the continuing Russia vs Ukraine war. Across developing countries, the World Bank said the impact of the Russia-Ukraine war was amplifying global supply chain bottlenecks that have persisted since the Covid-19 pandemic.
This poses the risk of a spike in inflation at the global level, especially in developed countries, thereby prompting a faster-than-expected tightening of monetary policy.
Rising war-induced inflation has also occurred in developing countries and has put additional pressure on commodity prices and supply chains.
“Higher prices have eroded real incomes and reduced private consumption,” the World Bank wrote in its report, quoted Thursday (9/6/2022).
Investment is also expected to weaken in many developing countries, particularly in developing countries that face tighter financial conditions amid increasing policy uncertainty and weak growth prospects.
External demand also weakened in line with slowing global growth, especially for countries that rely on Russia and Ukraine as export destinations.
The Russia vs Ukraine war which hampers the prospects for economic growth in developing countries due to rising inflation, trade disruptions, and policy uncertainty is believed to increase the risk of a slowdown in economic growth.
Furthermore, the World Bank estimates that global economic growth will fall in free fall in 2022. The World Bank also warns of the impact of stagflation on the world economy.
