World Bank Assesses Indonesia’s Economy as Most Resilient Amid Global Risks

World Bank Assesses Indonesia's Economy as Most Resilient Amid Global Risks – World Bank Assesses Indonesia’s Economy as Most Resilient Amid Global Risks. Indonesia’s economic growth is projected to be one of the most resilient in the midst of increasing global risks. In the June 2022 Global Economic Prospect (GEP) report, the World Bank predicts Indonesia’s economic growth will be at 5.1 percent for 2022 or only down 0.1 percentage point (pp) from the previous projection.

Head of the Fiscal Policy Agency of the Ministry of Finance, Febrio Kacaribu, in his official statement, Wednesday (8/6) said the projection was still within the government’s viewpoint of 4.8 to 5.5 percent. In the report, the World Bank stated that the Indonesian economy would receive a boost from rising commodity prices.

“The Indonesian economy continues to show resilience in the midst of the ongoing global turmoil. Apart from being one of the few countries that has been able to return yields to pre-pandemic levels since 2021, domestic economic performance this year has also continued to strengthen, among others, supported by the ongoing pandemic situation,” Febrio said.

Furthermore, Febrio explained that the Government is trying to maintain economic growth by making the pandemic situation conducive so as to provide comfort for the community in carrying out their economic activities. One way is to encourage vaccination, which has now reached 74.2 percent of the population for the first dose and 62.1 percent for the complete dose.

In addition, Febrio said that the APBN is still directed to be an important instrument in responding to the economic dynamics that occur, including being a safeguard. The APBN will continue to be directed at ensuring the protection of people’s purchasing power, especially vulnerable groups, as well as maintaining economic recovery.

“Currently, the risk of the global economy has shifted from a pandemic crisis to a potential energy, food and financial crisis. The Indonesian government will continue to maintain that domestic economic performance continues to strengthen even in the midst of various worldwide challenges,” individualized organization Febrio.

In contrast to Indonesia’s conditions, the World Bank predicts global economic growth will slow significantly from 5.7 percent in 2021 to only 2.9 percent in 2022 due to the escalation of various risks. Several other international institutions, such as the IMF, also lowered their projections for global economic growth by 0.8 pp in April.

Global risks, such as the international strategic conflict caused by the war in Ukraine, have made global inflationary pressures more persistent, mainly driven by soaring prices for energy and food commodities and supply disruptions.

Various countries are trying to control inflation through faster and sharper monetary policy tightening, especially in developed countries such as the United States (US) which has the potential to create tightening of global liquidity and push up borrowing costs. This has also made the prospect of future global economic recovery overshadowed by great challenges.

The decline in the World Bank’s economic growth projections had a broad impact in various countries. The projection for economic growth in 2022 for the Eurozone has been revised downwards by 1.7 pp, from 4.2 percent to 2.5 percent. This is because Europe is currently the epicenter of the international strategy conflict.

Russia’s economic growth is also projected to contract 8.9 percent, down 11.3 pp from the previous prediction. The US and China as the world’s two largest economies also experienced a decline in their growth projections for 2022 by 1.2 pp and 0.8 pp, respectively. In addition, developing countries such as India, Mexico, and Thailand also experienced a significant decline in projections, namely 1.2 pp, 1.3 pp, and 1.0 pp. (promotion/dep/hpy)