BI Revises Global Economic Growth upwards in 2023, but weakens in 2024

Jakarta – Bank Indonesia (BI) has revised upwards global economic growth in 2023 to 2.9 percent, which was previously only 2.7 percent.

BI Governor Perry Warjiyo said this was driven by the United States (US) economy in 2023 still growing strongly.

“Mainly supported by household consumption and the domestic-oriented service sector,” Perry said at the RDG press conference, Thursday, October 19, 2023.

Perry said, China’s economy slowed down due to weakening consumption and a decline in the performance of the property sector.

Meanwhile, in 2024 the global economy will grow slower than in 2023 which is predicted to be only 2.8 percent with a lower risk trend.

“The global economy is slowing down with heightened uncertainty. Global economic growth is predicted to weaken and accompanied by widening growth divergence between countries,” he said.

In addition, rising geopolitical tensions pushed up energy and food prices, resulting in continued high global inflation.

“To control inflation, monetary policy rates in developed countries, including the Federal Funds Rate (FFR), are predicted to remain higher for longer,” he explained.

Perry said, the increase in global interest rates is expected to be followed in the long-term tenor by an increase in yields on developed country government bonds, especially US Treasuries, due to an increase in government debt financing needs, and an increase in term-premia.

“These developments prompted a reversal of capital flows from Emerging Market Economies (EMEs) to developed countries and to more liquid assets, which resulted in the US dollar strengthening sharply against various world currencies,” he added.

In addition, global economic and financial uncertainty is getting higher as it coincides with rising geopolitical tensions.

“Therefore, it requires strengthening policy responses to mitigate the negative impact of the global slowdown on domestic economic resilience in EMEs countries, including Indonesia,” he added. (*)