Minister of Finance: Indonesian economy shows positive performance but must remain vigilant

Finance Minister (Menkeu) Sri Mulyani Indrawati | Dock. Ministry of Finance

JAKARTA – Finance Minister (Menkeu) Sri Mulyani Indrawati said Indonesia should anticipate the possibility of weakening global economic performance due to high inflation and rising interest rates.

Even so, Indonesia’s economic activities are beginning to show a positive performance, as evidenced by the mobility of people who are already above the pandemic level. He made this known at the KITA state budget press conference in Jakarta on Monday (09/26).

At the same time, the finance minister also reported that the global distribution of the Purchasing Managers’ Index (PMI) in the manufacturing sector fell from 51.1 to 50.3.

However, in the G20 and ASEAN-6 countries, only 24% of countries saw an acceleration and expansion in PMI activity or an increase from the previous month. These countries include Indonesia, Thailand, the Philippines, Russia, Vietnam and Saudi Arabia.

“However, 32% of countries such as America, Japan, India, Malaysia, Brazil, Australia, Singapore and South Africa, 32% of their PMI saw a slowdown, or the condition has dropped compared to the previous month.And even 40% of these countries, namely Europe, Germany, Italy, Great Britain, South Korea, Canada, Mexico, Spain and Turkey, PMI has now entered the contraction level. This means the majority is slowing down and contracting,” the finance minister said.

In addition, Indonesia’s economic performance through August 2022 is also improving, reaching 5.4%.

“Through the first half of 2022, Indonesia’s GDP level is already 7.1% higher than the pre-pandemic level. This means that we have recovered from the economic level. However, for countries like Mexico , Thailand and Japan, current GDP levels are still below pre-pandemic levels, which means they have not recovered at all,” the finance minister said.

Indonesia’s improving economic performance certainly cannot be separated from support in various sectors, including export performance which is quite impressive, so that it has recorded a trade balance surplus reaching $5.76 billion through August 2022.

“Exports have once again recorded quite an impressive increase. We see that in August it even reached 27.9 billion dollars. This is the highest in our history,” said the Minister of Finance.

Then, in terms of retail sales, Indonesia also recorded quite strong growth at 5.4%, the PMI index was expansionary at 51.7, electricity consumption growth reached 24.1 %, the growth of the industrial sector was 11.2% and the growth of manufacturing and mining production capacity. , as well as the Mandiri Spending Index which shows an optimistic level.

In this way, the economic growth of Indonesia is forecast by various international institutions at a level between 5.1 and 5.4% for 2022.

“The IMF predicts Indonesia’s economic growth this year at 5.3, the World Bank at 5.1, the AfDB at 5.4 and the Bloomberg consensus forecast at 5.2. For next year, it is still relatively stable. The IMF predicts the Indonesian economy at 5.2, the World Bank at 5.3, the ADB still at 5.0 and the Bloomberg consensus forecast at 5.0. This shows that the confidence as well as the performance of the Indonesian economy is considered quite resilient to the possibility of a global economic downturn. It’s certainly something positive but we have to maintain it,” he said.

This achievement certainly cannot be separated from the positive performance of the State Revenue and Expenditure Budget (APBN) as the main foundation for anticipating global economic uncertainty, as well as the impact of the ‘inflation.

“This condition is something that we will continue to monitor and of course we will manage in a way that does not impact too much on the national economy and also on the performance of our state budget. The state budget will continue to work very hard to protect the public and the economy, as well as to protect the state budget itself from shocks that occur due to turmoil in global financial markets, commodity markets and geopolitics concluded the Minister of Finance.

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