Be cautious, optimistic in facing global turmoil in 2023: BI

Be cautious, optimistic in facing global turmoil in 2023: BI

Bank of Indonesia (BI) Governor Perry Warjiyo deluvers a speech in the launch of Indonesian Economic Report 2022 and Sharia Finance and Economy Study 2022 in Jakarta on Monday (January 30, 2023). (ANTARA/Martha Herlinawati Simanjuntak/my)

Jakarta (ANTARA) - Bank of Indonesia (BI) appealed to people to exercise caution while remaining optimistic regarding the state of the national economy that is currently being plagued by global turmoil.

This optimism was voiced at the Indonesian Economic Report 2022 and Sharia Finance and Economy Study 2022, both of which are manifestations of BI's transparency and accountability.

"In 2023, we must be cautious. The global situation is still not friendly, still tumultuous, but with confidence, let us be optimistic," BI Governor Perry Warjiyo noted during the launch of the reports accessed here on Monday.

They projected that in 2023, Indonesia's economy would lie in the range of 4.5 to 5.3 percent, and it could hit the five-percent mark if consumption grew at a significant rate.

"Chance is it is about 4.9 percent. It is possible (that) if the consumption (grew at a) rapid rate, then it can be five percent," he noted.

Warjiyo stated that core inflation in the first semester of 2023 was certainly below four percent, and inflation for the Consumer Price Index (CPI) will return to the target of below four percent in the second half of 2023.

"Compare it with global inflation that remains high. We estimate that the current account balance will be around zero percent, the balance of payments will be surplus, capital flows pouring in, and God willing, there will be a lot of incoming, not only foreign investment but also portfolio investment," he elaborated.

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During the period from January 1 to January 26, 2023, a total of Rp48.08 trillion (US$3.21 billion) in foreign investment was recorded in state securities. As of January 17, 2023, net inflow in portfolio investment was recorded at US$4.6 billion.

He believes that the rupiah exchange rate against the US dollar would grow stronger owing to economic fundamental factors that provide basic justification that allow for the upgrade.

"High growth, low inflation, a balance of payments surplus, and good economic prospects, and that becomes the basis of our confidence that the rupiah will grow stronger after this global turmoil subsides, of course," he affirmed.

They are also optimistic that bank credit would grow 10-12 percent in 2023. In December 2022, bank credit growth reached 11.35 percent (yoy), higher than the growth in the same period in the previous year of 5.24 percent (yoy).

Moreover, they projected that in 2022, the national economy could grow, with an upward bias, in the range of 4.5-5.3 percent, and be supported by strong export performance and increased private consumption, among others.

Warjiyo stated that this achievement was satisfactory as compared to the growth of the global economy in 2022 that only hit the three-percent mark.

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He also emphasized that Indonesia's inflation in December 2022 reached 5.51 percent, which was an achievement as compared to other countries that experienced inflation of above eight percent.

Indonesia's current account balance was also recorded at US$4.4 billion, or 1.3 percent of the gross domestic product (GDP), which was a surplus in the third quarter of 2022. It was higher than the previous quarter's achievement of US$4 billion, or 1.2 percent of the GDP.

"That is a (matter of) pride, our sense of optimism. However, of course, life is full of challenges. We must be cautious to not let our guard down because the global situation is still chaotic, but of course, caution must be measured, gauged, and (followed up with) risk management scenarios," he emphasized.

Low core inflation at 3.6 percent was recorded at the end of 2022, as compared to the same period in the previous year (yoy), and the rate was much lower than BI's estimate of 4.61 percent (yoy).

CPI inflation at the end of 2022 was recorded at 5.51 percent (yoy), lower than the estimation by the Consensus Forecast of 6.5 percent (yoy) after the subsidized fuel price adjustment in September 2022.

"Our evaluation and our predictions for 2022, 2023, and even 2024. Let us be grateful and let us be optimistic and stay cautious," he concluded.

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