Monetary tightening shook financial markets in developing countries

The supply disruptions have caused spikes in global commodity prices and pushed up inflation rates in several countries, including Indonesia.

Jakarta (ANTARA) – President Joko Widodo, in his 2023 state budget speech, stated that aggressive monetary tightening in several countries had shaken the financial markets of many developing countries.

“(This) tightening has caused shocks in the financial markets of many developing countries. As a result, the exchange rates of most developing countries have weakened,” the president noted in the State Budget speech on the Financial Note 2023 and the State Budget Project at the Parliamentary Complex, here, on Tuesday.

Jokowi noted that the aggressive tightening of monetary policy by several central banks was one of the dynamics of the global economy that affected the preparation of the 2023 state budget planning. Meanwhile, other factors include a slowdown of the world economy affecting the pace of short-term domestic economic growth and geopolitical conflicts, as well as the war in Ukraine which had led to an escalation of supply disruptions.

Related news: State budgets 2023 prepared to anticipate turbulence: Jokowi

“Supply disruptions have led to spikes in global commodity prices and pushed up inflation rates in several countries, including Indonesia,” he remarked.

In the wake of these various pressures, Jokowi said the International Monetary Fund (IMF) had projected a significant slowdown in global economic growth, from 6.1% in 2021 to 3.2% in 2022 and 2.9% in 2023 .

Related news: Indonesia records state budget surplus of Rp 106 trillion: Jokowi

He further revealed that Indonesia is targeting economic growth of 5.3 percent (y/y) in the 2023 state budget.

The 5.3 percent economic growth target for 2023 is higher than the government’s 5.2 percent target in the 2022 state budgets. The gross domestic product (GDP) growth target of Indonesia also indicated that the economic recovery will continue after the country’s economy grew by 3.69 percent in 2021 following the impact of the COVID-19 pandemic.

Related news: Global uncertainty should not make Indonesia pessimistic: Jokowi

Related news: Govt sets state revenue target at Rs 2,443.6 trillion by 2023



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About the Author: Chaz Cutler

My name is Chasity. I love to follow the stock market and financial news!