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MACROECONOMICS - JAKARTA. Indonesia's central bank governor Perry Warjiyo said on Wednesday global economic growth prospects would weaken in 2024 before improving the following year.
Speaking at an annual gathering of financial executives and government officials hosted by the central bank, Warjiyo said global growth was expected at 2.8% in 2024 and 3% in 2025.
He said Indonesia needs to be cautious as global risks will persist in 2024 and also called for greater synergy between fiscal and monetary policy in Southeast Asia's biggest economy.
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Indonesia's growth is expected to slow this year with exports shrinking amid falling commodity prices and weakening demand, though spending for elections in February may boost domestic demand.
BI's monetary tightening cycle, including its 250 basis points interest rate hikes from August 2022 to October 2023, is also expected to hurt growth. Its latest rate hike in October was in response to the rupiah's depreciation, with the currency facing pressures amid the U.S. monetary tightening.
The rupiah strengthened on Wednesday ahead of the gathering.
The bank has set 2024's inflation target at a range of 1.5% to 3.5%, compared with this year's range of 2% to 4%. The headline inflation rate was at 2.56% in October.
