The Minister of Finance of Indonesia Sri Mulyani said that 2023 was a year with relatively many risks and it has been seen from the International Monetary Fund (IMF) that this downward revision of economic growth was caused by quite high inflation.
This was conveyed by Sri Mulyani exclusively in an interview with Kompastv Journalists in Washington DC, United States.
He revealed that many countries had used all of their policies to strengthen the global economy in the world from economic conditions that had been hit hard by the Covid-19 pandemic which until now had not been completed and were shocked by the Russia-Ukraine war which sparked geopolitical tensions that made energy prices, commodity prices, and others fueled worldwide inflation.
Many people say that a global recession is in sight.
The world economy is in a dangerous condition and is expected to continue to deteriorate in the next 2 years and is caused by soaring inflation, high-interest rate pressures, economic slowdown, and the problem of global supply chain breakdown due to the Russia-Ukraine war which is the world's energy and food barn.
The complexity of global economic problems is expected to be solved through the collective action of the large G20 countries which affect 85% of the world economy. As well as interests between countries, including geopolitical conflicts, must be able to be bridged in the G20 forum so that the threat of a global recession can be prevented immediately.
"In the US there is an almost 60% chance of a recession, especially in Europe, even this year's winter conditions are not the worst, next year will be even worse because this is related to geopolitics, political economic fragmentation, and investment," said Perry Warjiyo. Governor of Bank Indonesia (BI).
This condition will be accompanied by high inflation. Global inflation this year is expected to rise to 9.2%. Inflation in the US was even close to 8.8%, in Europe, it was 10%, and yesterday in England it was close to 11%.
The US Central Bank or Federal Reserve (The Fed) raised interest rates by 50 basis points to 4.25% - 4.5%, the highest level in the last 15 years. The increase was smaller than the previous 75 basis points for the fourth time in a row.
However, the Fed has announced that interest rates will continue to rise until early next year. The Fed dot plot shows that elite Fed officials expect interest rates to be in the 5% - 5.25% range, meaning there is still another 75 basis points hike and possible 50 basis points hike in February 2023 and 25 basis points before the interval. The world's most powerful central bank has announced it will not cut interest rates until at least 2024. Longer, the US economy is in danger of sliding into recession.