The Governor of Bank Indonesia Explains 5 Evidence of World Turmoil

Governor of Bank Indonesia Perry Warjiyo. (ANTARA PHOTOS/Hafidz Mubarak A.)

The world is in great turmoil. This was conveyed by the Governor of Bank Indonesia, Perry Warjiyo. He cites five pieces of evidence that the world is in turmoil.

He mentioned that economic and geopolitical uncertainties had caused the world to become unfavorable.

This was stated by Perry Warjiyo when opening the online national seminar for the Association of Indonesian Economic Scholars (ISEI), Tuesday (14/12/2022).

“The world is still in turmoil. Therefore, we must always be vigilant. There are 5 global problems that we will face in the future,” he said.

He explained that these 5 problems were the impact of the continuing war between Russia and Ukraine and the ongoing trade war between the US and China. Furthermore, said Perry, this occurred because of the lockdown due to the zero Covid policy in China and disruption to global supply chains.

The first alert, world economic growth will decline. This gave rise to the phenomenon of slow growth and increased recession risks in the United States and Europe. Second, very high inflation due to high global energy and food prices.

“Third, high-interest rates. Higher interest rates for longer, FFR [Fed Funds Rate] or The Fed’s interest rate reaches 5 percent in response to inflation and is expected to remain high throughout 2023,” Perry added.

Fourth, the very strong US dollar has created depreciating pressure on various world currencies including the rupiah.

Fifth, cash is king. Due to high-risk perception, global investors are withdrawing their funds from emerging markets to liquid assets to avoid risk.

In facing the global turmoil, Perry invites all parties to strengthen synergy and collaboration, cooperate, unite and jointly maintain the momentum of economic recovery.

“Synergy is the keyword for national economic resilience, recovery, and revival. This has been proven during our overcoming of the pandemic. We have avoided an economic crisis thanks to the close synergy between the BI government and KSSK,” said Perry.