Indonesian Minister of Finance Sri Mulyani Indrawati has been carefully monitoring the global economic situation, which is predicted to continue to slowing down in 2024.
Citing the latest World Bank report released in early January 2024, she said that the global economy is projected to grow by only 2.4 percent this year, lower than the 2.6 percent in 2023 (year-on-year/yoy) and 3 percent in 2022.
Sri Mulyani pays more attention on the economic developments in the world’s two economic giants ‒ China and the United States ‒ for the two are determinant the direction of the future global economy. The areas of concern include debt pressure in China, which is the main driver of the country’s economic slowdown. Even the largest property company in Hong Kong, Evergrande, has gone bankrupt.
Meanwhile, in the United States (US), although the economy grew strongly in 2023, fiscal pressures, especially debt interest payments and the US government’s debt ratio, are the main risks going forward.
However, Sri Mulyani is optimistic that Indonesia’s economy will remain resilient in the year of the elections.
“In a global environment that is uncertain and tends to slow down, Indonesia’s economy remains resilient, supported by domestic demand that can substitute for external weakness,” she said while addressing the Financial System Stability Committee (KSSK) Press Conference at the Ministry of Finance office on Tuesday, January 30, 2024.
She maintained that she continuously monitored global developments, ranging from increasing geopolitical tensions to fiscal pressures in various countries. Therefore, she said, this year the government does not change its economic projection for 2024, which remains at 5.2 percent according to the assumptions of the State Budget.
“Strong economic growth in 2024 is mainly driven by the elections, which we hope will have a positive impact on government consumption in the conduct of elections and from the community, as well as the continuation of the 2024 NRP implementation,” she explained.
Referring to the Global Economic Prospects report edition of January 2024, this year’s gross domestic product (GDP) growth will record the slowest pace in half a decade in the last 30 years. GDP for developing countries is estimated to grow by only 3.9 percent, more than one percentage point below the average growth in the previous decade. This means that although Indonesia’s economy is predicted to slow down, it will still be higher than the average. Meanwhile, GDP for low-income countries is expected to grow by 5.5 percent, weaker than previous projections.
