Initially, in July 2022, BI predicted a 2.9 percent growth, but now lowered it to 2.8 percent.
"The global economy is at risk of lower growth rates, along with high inflationary pressures and global financial market uncertainty," Governor of Bank of Indonesia Perry Warjiyo said during a press conference of the Bank of Indonesia's Board of Governors' Meeting Results.
He estimated that the decline in economic growth would continue and be greater in 2023, particularly in the United States, Europe and China, and made worse by the risk of recession in some developed countries.
They projected that next year, the world economy would grow 2.7 percent, and there are even some risks of a decline to the level of 2.6 percent
Meanwhile, the US economy was expected to grow this year some 2.1 percent, but decline next year to 1.5 percent; Europe's would grow 2.1 percent in 2022 and 1.2 percent in 2023; and China's economic growth would reach 3.2 percent in 2022 and increase to 4.6 percent in 2023.
Warjiyo said that the volume of world trade also remained low. In the midst of an economic decline, supply disruptions continued to grow, causing sustainable energy prices to skyrocket.
"Global inflationary pressures are getting (intense) along with geopolitical tensions, ongoing protectionism policies, and the occurrence of heatwave phenomena in several countries," he noted.
He also mentioned that inflation in developed and developing market countries, aka emerging markets, was rising, and even core inflation was on an increasing trend, prompting central banks in many countries to impose aggressive monetary policies.
Recent developments indicated that the benchmark interest rate of the US Central Bank, the Fed, aka the Fed Funds Rate (FFR), was higher and was expected to keep increasing.
These events led to increasing value of the US dollar and accentuated uncertainty in global financial markets, thereby disrupting the flow of portfolio investment and pressure on exchange rates in developing market countries, including Indonesia, he noted.
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Translator: Agatha O V, Mecca Yumna
Editor: Sri Haryati
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