Potential Global Uncertainties Still Overshadow Indonesia’s Economy

Potential Global Uncertainties Still Overshadow Indonesia's Economy (photo: Adrien Delforge - Unsplash)

The post-pandemic economic recovery is going very well in Indonesia. The Governor of Bank Indonesia (BI) predicts that the national economy will remain on a positive path. However, potential global uncertainties are still looming. Then, what potential uncertainties does he mean?

Indonesia actually made it through 2022 very well amidst the onslaught of global issues such as recession and war. Some countries have even fallen into recession. Others were badly affected by the war between Russia and Ukraine.

Several government policies have succeeded in bringing the Indonesian economy safely through 2022. The Governor of Bank Indonesia, Perry Warjiyo, even predicts that Indonesia’s economic growth in 2023 is expected to reach 4.5 percent to 5.3 percent (Friday, 27/1). However, another exam will follow in 2023.

Furthermore, Perry explained that the potential for global uncertainties that would occur this year included the global economic slowdown, the persistently high inflation rate, high policy interest rates for a long time, the US dollar exchange rate remaining strong, and the phenomenon of cash being the king.

He ensured that BI have a special strategy to deal with these challenges, namely the KIS strategy. The KIS is Consistency, Innovation, and Synergy in formulating various policies.

According to him, the implementation of KIS by the central bank together with the government and other strategic stakeholders has proven effective in maintaining Indonesia’s economic resilience and financial stability during 2022.

In addition, Perry said that inflation is expected to be maintained in the range of 3% ± 1% in 2023. This is in line with the consistent strengthening of economic fundamentals, it is believed that the rupiah exchange rate will continue to appreciate.

On the other hand, Executive Director Head of the BI Communication Department Erwin Haryono said the central bank will continue to make various innovations which are summarized in five main policies.

The five policies are monetary policies that are pro-stability and macroprudential policies, payment system policies, and financial market deepening policies, as well as MSME policies and the sharia economy that are pro-growth.

“These policies are supported by synergy through close coordination with the government and other strategic stakeholders,” said Erwin.