Returning from the US, Sri Mulyani: 2023 A Hard Year Due to High Inflation and Banking Crisis

Armfalcon.com, JAKARTA — The government said that the world economy is facing challenges, especially the US banking crisis and high inflation rate for a long time. This was conveyed by Minister of Finance Sri Mulyani while attending the International Monetary Fund (IMF)-World Bank meeting which was attended by the minister of finance and central bank governors in Washington DC, United States of America (US).

Sri Mulyani said that the existence of inflation and the benchmark interest rate which was still high for a long time suppressed economic growth. “2023 is a tough year, developed countries will experience economic slowdown and interest rates will increase due to inflation which weakens their economy,” he said during an online press conference on the KiTA APBN, Monday (17/4/2023).

Sri Mulyani revealed that during the IMF-World Bank Spring Meeting last week, the finance ministers and governors of the world’s central banks saw that the economic slowdown in developed countries would have an impact on emerging and developing countries that rely on exports.

“Reopening China has not been able to recover its economy, this confirms that growth is still weak and affects exports and imports,” he said.

Sri Mulyani explained, based on IMF projections, the inflation rate for developing countries this year would be 8.6 percent and developed countries by 4.7 percent. Overall, global inflation, by seven percent, will decline next year.

“However, the level is still historically high, this means that inflation will still be high in the long term, higher for longer, followed by high and rather long interest rates,” he said.

“Inflation in other countries is still very high struggle, many are above five percent or Argentina, Turkey are all high level, Argentina is above 100 percent and Turkey is above 50 percent,” he said.

In addition, inflation and interest rates have triggered a banking crisis. According to Sri Mulyani, this banking crisis still needs to be watched carefully. He said Indonesia was one of the countries whose economic growth was still maintained or could grow five percent this year.

“Indonesia’s economy is above five percent, few (countries) can survive. We will maintain this. Projections for global economic growth in 2023 are all still in the range of 2.8 percent, in this case slightly weaker than the January projection this year. However, it is rather high From last year’s range of 2.7-2.8 percent, next year is expected to be better,” he said.

However, he said, Indonesia must be wary of the trend of declining exports. From his records, Indonesia’s exports contracted by 13.5 percent in March 2023.

“Along with this contraction, the manufacturing industry also experienced a contraction of 6.2 percent, this is a trend that we must be aware of,” he said.