Jakarta, CNBC Indonesia – Bank Indonesia believes that there will be no stagflation in China as many have suspected. Signs of improvement in China’s economy have begun to appear at the end of this year.
“We ourselves still believe that there will be no stgaflation in China,” said Head of the Department of Monetary Management of Bank Indonesia Hariyadi Ramelan to CNBC Indonesia, Wednesday (12/8/2021).
Stagflation is where the economy is slowing down but inflation is high. So that is considered a ‘nightmare’ for China, because economic actors have to pay dearly for mediocre economic growth.
Hariyadi explained that China’s economic improvement was reflected in the manufacturing PMI indicator which entered the expansion zone. Where in October it was in the position of 49.2 and in November it was 50.1 points.
Even China’s central bank has lowered its reserve requirement by 50 basis points (bps). So this will increase banking liquidity in China by around 1.2 trillion yuan.
“This was only done 2 days ago and of course we see that the injection of liquidity of 1.2 trillion will support China’s economic activity and at the same time ease the tight liquidity in China’s financial system,” he said.
Meanwhile, the emergence of a new variant of Covid-19, namely Omicron, is considered not to have a major impact on the positive movements that have occurred in China.
“We believe that even if there is an Omicron spread, it will be relatively minimal with a limited vitality level,” he concluded.
(me/me)
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