PRESS RELEASE NO.39/SP/TKMG20/11/2022 G20

COMMUNICATIONS AND MEDIA TEAM

Marves - Jakarta, November 9, 2022 – The Central Bank (Bank Indonesia/BI) predicted that Indonesia's economic growth would remain positive until next year. Strong household consumption, exports, and investment have become the locomotive for the country’s Gross Domestic Product (GDP). In addition, Indonesia's position in this year’s G20 Presidency has further boosted the national economy.

"The G20 plays a vital role in encouraging dialogue, cooperation, and coordination of policy responses for global economic recovery," Deputy Governor of Bank Indonesia Dody Budi Waluyo said to the G20 Communications and Media Team, Wednesday (11/9).

According to Dody, the next G20 Leaders' Summit in Bali will provide direction and market confidence for future economic prospects and financial system stability. BI also believed that public consumption would remain strong, although restrained by fuel price increase.

On the other hand, Dody said that there would be a risk of a global economic slowdown entering 2023. However, he underscored that domestic consumption would remain solid ahead of the 2024 general elections.

The economy throughout 2022 until next year is expected to grow in the range of 4.5--5.3 percent, with a tendency to reach the upper limit. The GDP recorded a growth of 5.4 percent, over the nine months of 2022, compared to the January–September period last year.

The highest growth was recorded on the performance of exports of goods and services which grew by 19.57 percent, followed by consumption of non-profit institutions serving households (LNPRT) and household consumption which grew by 5.66 percent and 5.08 percent respectively compared to the same period of the previous year.

Until next year, the global economic challenges will not be easy as threats of inflation and global financial tightening, as well as food and energy crises, have pushed the global economy to slow. A number of exchange rates in Asia, including the Rupiah, weakened because the US Dollar was too strong. The Federal Reserve's aggressive interest rate hikes have caused the US Dollar to strengthen quite strongly against a number of currencies in the world.

In the future, the Deputy Governor said, the monetary policy adopted by the Central Bank would be that of pro-stability and policy to reduce inflation in accordance with the set target. Core inflation will be kept in check to its target in the Q2 of 2023. Indonesia's inflation target for 2022 to 2023 is set at around 2-4 percent.

Statistics Indonesia (BPS) recorded an inflation of 5.71 percent (yoy) as of October this year. In accumulation, from January to October, the inflation reached 4.73 percent while the core inflation was at 3.31 percent in October.

Monetary operations through an increase in the interest rate structure on the money market, in line with an increase in the key interest rate, will be carried out to keep in check the inflation to its target. Other policies that support growth will be pursued through accommodative macroprudential policies to bolster bank credit growth including by creating an efficient, fast, smooth, and secure payment system. Financial market deepening policy is also set to increase the value of financial market transactions as a source of economic financing.

According to the Deputy Governor, in a bid to stabilize the exchange rate, BI has committed to adopt triple intervention measures namely spot market, domestic non-deliverable forward (DNDF), and bond market, namely the sale and purchase of government securities (SBN) in the secondary market.

On July – September 2022, the economy grew by 5.72 percent (yoy). The biggest sources of growth consisted of the performance of exports of goods and services (5.21 percent), household consumption (2.81 percent), and investment performance (1.57 percent). By island, the largest contributors were Java (3.37 percent), Sumatra (1.01 percent), and Sulawesi (0.55 percent).

"We don't see any threat of a recession to Indonesia, because the economy until Q3 recorded positive growth. There was no contraction," the Managing Director of PT Samuel International Harry Su said. However, he explained that there is a risk of a global economic slowdown including in Indonesia next year, but it will not be so severe so as to cause a recession in Indonesia.

About #G20Updates:

Various communication products which are prepared by the G20 Communications and Media Team. It is aimed at providing comprehensive information regarding preparations and issues related to the G20 Summit held in Bali, Indonesia on November 15-16, 2022.

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