Jakarta, CNBC Indonesia – The Indonesian government, in its financial note for fiscal year 2024, estimates that the global economy will improve next year.

“Developing countries are expected to be the main supporter of the global economic recovery in 2024, amid the still weak economic outlook of developed countries,” the Indonesian government wrote in a financial note.

Indonesia considers this improvement to be supported by the moderating trend in inflation and the less aggressiveness of monetary tightening, which leaves room for a global recovery in 2024. Global inflationary pressures which have eased since 2023 will continue to moderate until 2024.

As global inflationary pressures continue to ease, the aggressiveness of monetary tightening in 2024 will ease and easing is expected to be implemented by several major countries, including the United States.

In the latest Fed dot plot from June 2023, it is indicated that the benchmark Fed Funds Rate (FFR) will fall to 4.50% at the end of 2024.

However, the reference interest rate remains relatively high and will remain so (longer) in the coming periods due to inflation still above the target.

Geographically, the government estimates that global economic growth in 2024 will be supported by the Asian economy, which remains strong. China’s economic growth outlook is expected to slow, but India and a number of ASEAN countries are expected to continue to strengthen.

“China’s economic growth is expected to slow in 2024, after rebounding from the pandemic in 2023. A reopening that does not meet expectations will weigh on the recovery in 2023 and is expected to hamper the pace of future recovery,” the government stressed. .

The IMF estimates that China’s economy will slow again, growing just 4.5% in 2024. The World Bank also projects that China’s economic growth will slow to 4.6% in 2024. The United States is expected to also experience an economic crisis. to slow down.

“The disruption to the U.S. economic recovery is the impact of aggressive monetary policy tightening since 2022 as well as continued high inflation,” the financial note said.

With the inflation rate still above the medium- and long-term objective, interest rates will remain high and become an obstacle to the expansion of American economic activity.

To ensure that the outlook for economic growth is not too gloomy, the US government is trying to pursue an accommodative but still prudent fiscal policy.

At the same time, economic growth in the European region is expected to be able to maintain a positive, albeit low, level in 2024. Positive growth in this region is supported by more controlled inflation and effective monetary policy from the European Central Bank ( ECB).

European countries are also trying to find a balance between tight monetary policies and more accommodative fiscal policy.

As noted above, India’s economic growth is expected to remain strong in 2024, becoming the highest among G20 countries. India contributes three-quarters of the economic output of the South Asian region.

The IMF estimates that the subcontinent country will grow by 6.1% this year and increase in 2024. The World Bank also estimates that the Indian economy will continue to strengthen in the future, with growth exceeding 6% for 2023 and 2024.

“India’s economic growth will be the highest among G20 countries, supported by sustained domestic consumption,” the Indonesian government wrote.

The recovery of Indian manufacturing sector also continues post-pandemic. India’s reforms and policy strategies focus on strengthening infrastructure, investment, manufacturing and technology.

So what about Indonesia?

Reading the financial note, President Joko Widodo said economic growth in 2024 is estimated at 5.2 percent. For the record, this figure is lower than the target of 5.3% set this year.

Finance Minister Sri Mulyani Indrawati said the low economic growth target in 2024 was due to global conditions. Like economic weakness in the United States, Europe and China.

“America, Europe, in the next 1 to 1.5 years, the next 12 to 18 months, we anticipate this aspect,” Sri Mulyani emphasized.

(haa/haa)