“I think we all agree that the global economic situation has developed in a dynamic fashion, and is very troubling; creating big issues for our policy makers," she observed at the ASEAN+3 Economic Cooperation and Financial Stability Forum here on Friday.
The economy is currently worsening due to high inflation and the monetary response to the point that there is a risk of recession, and the challenge has persisted at a time when the COVID-19 pandemic is not over yet, the minister said.
The global risk has slowly changed: initially, it involved the health crisis, and has since included various economic and financial issues.
The International Monetary Fund (IMF) has projected that global economic growth will dive from 6 percent in 2021 to 3.2 percent in 2022, and decline further to 2.7 percent in 2023.
The minister said that global economic prospects, which have spiraled downward have forced countries — be they big or developing ones -- into a proverbial race.
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This has been made worse by factors such as the war in Ukraine, which has, in fact, sparked food, energy, and fertilizer crises.
The war has triggered the worst spike in inflation in many developed countries in almost 14 years, and has been followed by even stricter monetary policy and skyrocketing interest rates.
This response has led to high capital outflows from many developing countries as well as the weakening of currencies.
"The main short-term challenge for many countries is how we have to overcome inflation without weakening the economy," she said.
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In spite of all this, some Asian-Pacific countries have still recorded good performance, such as the Philippines, Thailand, Malaysia, Vietnam, and Indonesia, Indrawati noted.
She cited the example of Indonesia, saying it has been able to maintain a growth rate of above 5 percent for four consecutive quarters. In the third quarter of 2022, the nation recorded a growth of 5.7 percent.
Strong domestic demand and strong exports backed by commodity prices have contributed very significantly to this growth.
“The recovery in many other Asian-Pacific countries has also been relatively strong. An environment like this will be one of the most challenging tasks, which policy makers will have to face in 2023," the minister said.
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Translator: Astrid F H, Mecca Yumna
Editor: Fardah Assegaf
Copyright © ANTARA 2022
