Mulyani highlighted that the current trend is slightly better than the initial prediction while adding that the year 2023 is projected to be a dark time for the global economy, as its growth rate is pegged at 2.1 percent, a significant decline from last year's 6.3 percent.
"In the first semester of this year, the condition turns out to be slightly better than the initial prediction," she noted during the Finance Ministry's inflation-related event, followed virtually in Jakarta on Monday.
Nevertheless, the minister stated that this year, the world is still projected to suffer the lowest rate of trade volume growth in the past two years, with the figure stuck at 2.0 percent, a decline as compared to 5.2 percent in 2022 and 10.7 percent in 2021.
"When countries are not trading with each other, some parts of the world will experience a disruption in the supply of goods or services. This, in turn, will lead to an increase in prices," she elaborated.
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The minister then pointed out that the inflation rate is highly vulnerable to disruptions to supply, trading, and distributing activities, while the rate itself can cause the purchasing power to decrease.
A decline in demand will, in turn, decrease production activities, Mulyani cautioned.
In 2022, the world witnessed a very high increase in inflation, from almost zero percent to 8.7 percent. Meanwhile, several advanced countries experienced an increase in deflation rate, reaching 7.3 percent.
Based on the Manufacturing Purchasing Managers' Index (PMI), as of June 2023, some 61.9 percent of the world's countries, including the United States, Germany, France, South Korea, Malaysia, and Vietnam, are experiencing a contractive index.
"Only 14.3 percent of countries are experiencing accelerated and expansive (PMI), including Indonesia, Turkey, and Mexico," she remarked.
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Translator: M Baqir, Tegar Nurfitra
Editor: Yuni Arisandy Sinaga
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