Indonesia’s export sector is currently experiencing a slowdown. Head of the Trade Policy Agency of the Ministry of Trade Kasan Muhri said that this is due to a decrease in Indonesian traditional market demand.
High inflation in many countries, especially the United States and Europe, is thought to be the main cause of the slowdown.
“Everything has already been predicted. A warning has been given that from the external side it has to do with inflation, then there is the impact of geopolitics which continues to bring uncertainty. This will disrupt food, energy, and prices,” he said at the launch of the ‘Indonesia Economic Prospect – December 2022 edition, Trade for Growth and Economic Transformation’ in Jakarta, Thursday (15/12/2022).
In addition, he is of the view that inflation will automatically reduce purchasing power. When inflation rises, people’s purchasing power decreases. If purchasing power decreases, demand will also decrease.
According to Kasan, in the current global economic slowdown, Indonesia benefits from a low level of trade openness. Therefore, Indonesia does not feel too big an impact due to reduced demand in traditional markets.
“But don’t forget, the World Bank report earlier stated that our trade openness is stagnant, not as big as ASEAN countries. I also agree that the figure is indeed not up to 50%, only 20 to 30%,” said Kasan.
If the trade is very open, then there is a decline in the global market, and Indonesia will automatically be affected. Any external shock, said Kasan, will have a big impact on countries with large trade openness.
“So it’s like Singapore Thailand Malaysia Vietnam. All of them have trade openness above 50%. Automatically if outside disturbances occur, they will feel a much bigger impact,” he explained.
In this case, Kasan sees Indonesia as lucky. However, this condition does not mean that Indonesia should remain silent. He emphasized that Indonesia is still looking for new markets amid the current difficult conditions.
“In this case, we know there is high inflation, leading to a crisis, and reduced demand, but there are countries outside of the traditional countries, and the potential is still there. That’s why we are diversifying (export markets) to countries that are not experiencing a crisis such as a crisis. in Europe and the United States,” he added.
Therefore, he said the government is exploring new markets (non-traditional markets) in countries that are currently experiencing economic growth. This was done to fill the decline in demand from traditional markets.