Indonesia's economic challenges will be external in nature: Indrawati

Indonesia's economic challenges will be external in nature: Indrawati

Sri Mulyani Indrawati during the Book Soft Launch of Keeping Indonesia Safe from COVID-19 here on Friday (August 5, 2022). (ANTARA/AstridFaidlatulHabibah/FR)

We will never know what is going to happen. It depends on the data. Whatever it is, we have to anticipate it. It is the same thing in Europe
Jakarta (ANTARA) - Challenges that hinder Indonesia's economy will be external in nature, including uncertain geopolitical circumstances as well as policy aggression from developed countries, Minister of Finance Sri Mulyani Indrawati stated.

Geopolitical pressure, including war, is a very hard-to-predict situation, given that the world was focusing on the Russia and Ukraine war one day only to transition to Taiwan and China, she noted.

Uncertain geopolitical circumstances cause various impacts, including energy, food, and fertilizer price crisis, due to the Russia and Ukraine war, she highlighted during the Book Soft Launch of Keeping Indonesia Safe from COVID-19 here on Friday.

In addition, The Federal Reserve's (The Fed's) decision to aggressively increase its interest rate also adds further challenges for various countries, including developing nations, such as Indonesia.

Indrawati likened The Fed's decision to raise its interest rate aggressively to a person using an antibiotic, at a high dose, to cure a disease.

"It already utilizes a very powerful policy instrument. Who is going to be the first one that the antibiotic hits? Is it the disease or inflation? Or the growth or excess?" she pointed out.

If the US recovery foundation or agency is not yet strong, then The Fed's action that initially aimed to stem the rate of inflation would only stagnate economic growth, the minister opined.

"We will never know what is going to happen. It depends on the data. Whatever it is, we have to anticipate it. It is the same thing in Europe," she remarked.

Nobody will ever know the situation in the future that makes data an important aspect in observing potential incidents in the future and anticipating the spillover effect from developed countries' policies.

"What we need to handle is the spillover from the economy and policies that these countries adopt," she remarked. 

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