REPUBLIKA.CO.ID, NUSA DUA -- Finance Minister Sri Mulyani has predicted that a potential slowdown in the global economic growth in 2018 and 2019 may have an impact on the Indonesian economy. She said that on the sidelines of IMF-World Bank Annual Meeting in Nusa Dua, Bali, on Tuesday.
"Developing countries, including Indonesia will revise downward (their economic growth) apparently because of global trade or a high interest rate," she told Antara.
The Fed rate hike and the US dollar's appreciation may make borrowing costs more expensive and investment unable to grow as expected, she said.
"Investment usually comes from borrowings. If the borrowings are expensive and are not profitable, then investors will not borrow money and investment will eventually decline. We must take caution since investment has just begun to recover," she said.
In fact, investment has been showing signs of improvement and grew in the range of 7.0 percent to 7.5 percent in the previous quarter, she said.
The potential slowdown in investment growth may have an impact on declining demand and sluggish imports, leading to the decline of national trade growth as a whole, she said.
"The decline in imports to lower the current account deficit is good but we must stay alert for imports which show signs of weakening," she said.
One of the ways to keep the economic growth within the government-set target range amidst global economic turbulence is to boost exports, she said.
"If exports run at a faster pace and react under the current circumstances, they can increase. So even if investment is stagnant, our growth still has a chance to increase. But if exports do not perform as quickly as expected, then the growth will become weaker," she said.
The International Monetary Fund (IMF) in its latest publication has revised downward its global economic growth forecast for 2018 and 2019 from 3.9 percent to 3.7 percent, citing several risks that have begun to have a real impact.
In the World Economic Outlook report, the Indonesian economy is projected to grow 5.1 percent in the 2018-2019 period. "I think it is still within the range of 5.17 percent to 5.3 percent that we have discussed with the House of Representatives some time ago," she said.
Earlier, the International Monetary Fund (IMF) has projected that Indonesia called as the ASEAN-5 economies along with Malaysia, Philippines, Thailand, and Vietnam, will grow 5.2 percent next year. It would be slightly lower than last projection at 5.3 percent in 2018.
"Indonesia's growth has been a real success story, and we have also downgraded our growth forecast, but Indonesia has proven itself to remain resilient and robust," IMF's Economic Counsellor and Director of Research, Maurice Obstfeld, noted during the World Economic Outlook press briefing in Nusa Dua, Bali, on Tuesday.
The IMF underlined that the negative revision was not only in the ASEAN-5, particularly Indonesia and Malaysia, but also occurred in some important economies in Latin American countries Argentina, Brazil, and Mexico; Turkey in emerging Europe; India in south Asia; Iran in the Middle East; and South Africa in Africa, in the range of 0.2 to 0.4 percentage point.
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