The Potential Impact of US-China Economic Uncertainty on Global Economy

Arrijal Rachman, CNBC Indonesia

Tuesday, 19/09/2023 17:25 IWST

Photo: Minister of Finance Sri Mulyani took part in the inauguration of the Jabodebek Integrated LRT. (Presidential Secretariat Youtube Screenshot)

Jakarta, CNBC Indonesia – Minister of Finance Sri Mulyani Indrawati said that global economic pressure will still be heavy next year, which has strong implications for domestic economic growth.

According to him, global economic pressure will still be triggered by economic uncertainty from the two countries with the world’s largest economic powers, namely the United States and China.

“We see that the two largest economies, America and China, both have a character of uncertainty that must be watched out for and will definitely cause spill overs or spreads throughout the world,” said Sri Mulyani during a working meeting with the DPR Budget Agency (Banggar) in Jakarta, Tuesday (19 /9/2023).

For your information, the US economy is still haunted by high inflationary pressures. In August 2023, the US announced that annual inflation would still be at 3.7%, up from 3.2% in the previous month. Economic growth in the second quarter of 2023 was only 2.1%, lower than market players’ estimate of 2.4%.

As for China, many people also predict that its economic growth will continue to slow down because one of its economic pillars, namely the property sector, is due to the bankruptcy of several large real estate companies such as Country Garden and Evergrande.

The International Monetary Fund (IMF) has also predicted that China’s economic growth will only be around 5.2% in 2023 and 4.5% in 2024. This will have an impact on import demand from its main trading partner countries, such as Indonesia.

Apart from the problems between the two countries, Sri Mulyani also said that commodity prices also have the potential to fluctuate due to high geopolitical tensions in various parts of the world. Resulting in disruption to the supply chain of goods, thereby disrupting price stability.

“Geopolitics and disruption of the supply chain are affecting commodity prices. What we can see most is that the oil price that we said earlier has now moved above US$ 95 per barrel,” said Sri Mulyani.

“This is also greatly influenced by geopolitics and climate change, such as coal prices and CPO prices. All of this creates challenges in managing the APBN,” he said.

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