Indonesia says economy more resilient to absorb inflation shock

Indonesian minister said we expect our economy to grow up to 5.3% this year

Finance Minister Sri Mulyani Indrawati said Indonesia is taking steps to make its economy more resilient to withstand global shocks such as inflation, especially from the United States.

As the world’s largest economy, what the United States does has a strong impact around the world, including Indonesia, the minister said.

To combat inflation, the US raised interest rates, which affected capital outflows due to a stronger dollar, Sri Mulyani told CNBC.Asian street signs” on Thursday.

As a result, the finance minister said, Indonesia is making more efforts to “strengthen our resilience”.

That includes “first making sure that the financial sector is healthy and robust to this interest rate fluctuation. Second, the real sector economy will also be resilient enough for them to absorb this shock. “, said Sri Mulyani, who was attending. the Group meeting of 20 finance ministers and central bank governors in India this week.

Early February, US Federal Reserve benchmark interest rate hike by a quarter of a percentage point and give little indication that it’s nearing the end of this hiking cycle.

Inflation eases

Unlike the United States, where inflation stubbornly tallIndonesia’s inflation slowed in January.

The headline consumer price index, a key indicator of inflation, fell to 5.28% year-on-year from 5.51% in December, according to government data.

Ignoring volatile food and energy prices, core inflation stood at 3.27% in January annually, down slightly from 3.36% in December, the data showed.

Last week, Indonesia’s central bank kept the seven-day repo rate at 5.75%, pausing after six consecutive increases. But inflation is still above high Target scope of Bank Indonesia from 2% to 4%.

However, Indonesia has done a good job of coordinating monetary and fiscal policy tools to contain inflation and sustain growth, Sri Mulyani said.

She added that the government is also supporting the central bank to ensure inflation remains low so as not to affect people’s purchasing power.

“We also know that the source of inflation is not the central bank, the circulation of money, or the money supply. We also see that inflation comes from some supply side. That’s why we do. solve this problem,” emphasized Sri Mulyani. Inflation will be moderate this year.

Strong growth

The minister added that despite the global downturn, Indonesia’s economic growth remains strong as domestic demand continues to improve.

“Last year, we had a very good year in terms of growth. We were 5.3%. I think this is also… the highest among the G-20 as well as the ASEAN countries,” said Sri Mulyani. .

“This year, growth has come from domestic consumption and investment, which “are both recovering very strongly,” she added. “Consumer confidence is also very high.”


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