Cabinet Secretariat Holds FGD on 2023 Economic Outlook
Cabinet Secretariat, Wednesday (11/09), held Focus Group Discussion (FGD) on the 2023 Economic Outlook, under the theme “Navigating Economy amid Risk of Recession”, at Swiss-Belinn Saripetojo Hotel, Surakarta city, Central Java province.
The FGD which is held annually aimed at providing platform for a discussion that the results will be submitted to the Cabinet Secretary for proposing recommendation for policy making process to the President.
Deputy to the Cabinet Secretary for Economic Affairs, Satya Bhakti Parikesit, said that the FGD will produce recommendations to address economic condition each year.
He went on to say that current global condition is full of uncertainties and we must face rising inflation and interest rate, liquidity tightening, food and energy crises, geopolitical fragmentation, and the threat of a global recession.
“We have not fully recovered from the COVID-19 pandemic, yet we must face global crisis, war between Russia and Ukraine which affected the price of food, globally and nationally,” he stated.
According to the Deputy, the situation became a risk to Indonesia’s economy that can be seen from declining Indonesia’s trade balance from US$5.76 billion in August to US$4.9 billion in September. In addition, Real Sales Index in August (year on year/YoY) also decreased compared to previous month. Meanwhile, the Consumer Confidence Index (IKK) in September stood at 117.7, declined from 124.7 in August.
Nevertheless, Indonesia’s economic growth in the third quarter of 2022 was still maintained at 5.72 percent; it is higher compared to that of the second quarter of 2022 at 5.45 percent (YoY).
“The domestic economy in general still shows resilience, supported by increased domestic demand, maintained investment, and continued positive export performance, although it began to show the indications of temporary weakness in September 2022,” he added.
For the fourth quarter of 2022, Bhakti said there are still a number of economic risks that must be faced and mitigated optimally. These risks include, among others, inflation that exceeds the target and affects household purchasing power, tightening liquidity, the weakening trend of the Rupiah exchange rate, and the decline in commodity prices, export performance, and current account performance.
“The increase in Bank Indonesia’s key interest rate will also result in an increase in loan interest rates which in turn will certainly have an impact on increasing NPL (non-performing loans] if the relaxation of credit restructuring provided by the OJK (Financial Services Authority] is completed; and the increased risk of default for SOEs that have high debt and will eventually become a burden on the government. These are some of the risks that we need to mitigate in our efforts to maintain good growth in the fourth quarter of 2022,” Bhakti said.
Bakhti also expressed hope that this FGD can provide an overview of the 2023 economic outlook and economic mitigation measures amid the threat of a global recession.
On that occasion, Bhakti explained three targets of the FGD. First, to assess the performance of national economy in 2022 in the form of monetary, financial service, and financial system stability, central and regional fiscal, structural performance reform, and business climate development.
Second, to identify various global and national risks, as well as to mitigate impact of these risks over the performance of the national economy at the end of 2022 and 2023.
Third, to formulate strategies and policy recommendations needed to mitigate the risk of recession, navigate the economy, and at the same time accelerate economic transformation which is the main theme of economic policy in 2023. (FID/UN) (RAS/HD/MMB)