Minister of Finance Sri Mulyani Indrawati said that the investment climate in various countries was increasingly depressed. FOTO/doc.SINDOnews
JAKARTA – Minister of Finance (Minister of Finance) Sri Mulyani Indrawati revealed that the investment climate in various countries is increasingly depressed and experiencing uncertainty due to a fragmented world, aka divided by world geopolitical conflicts.
According to him, investment in the world today is no longer based on profitability but rather a friend or non-friend approach. This phenomenon is called friend shoring, where a country focuses more on trade or investment with its closest political partner countries than other countries.
“Of course, when we talk about economic development, we cannot be separated from the global conditions that are currently occurring. We have also stated in a short presentation at the beginning that global conditions are still filled with geopolitical tensions which will certainly further suppress investment interest,” said Sri Mulyani when BRI Microfinance Outlook 2024 event, Thursday (7/3/2024).
Another problem is that global inflation is still high, even though it has decreased compared to its peak period, namely 2022-2023. The former Managing Director of the World Bank said that this case caused pressure on global interest rates which were still relatively high.
“There is hope that global interest rates, this means in developed countries, will start to decline, but this hope will be slightly dampened,” he said.
At the G20 meeting, he continued, the Central Bank of the United States, the Fed and Europe saw that world inflation figures were still quite high. Therefore, the interest rate policy or policy rate is still waiting for the inflation trend to decline.
“They will look at the inflation figures and the underlying factors which are still considered quite high and sustainable. Therefore, their interest rate policy may still have to wait until they can be sure that inflation can fall,” he said.
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Sri Mulyani views that high interest rates over a long period of time also suppress inflation. On the other hand, global economic fragmentation through protectionist policies has also put a lot of pressure on the Purchasing Managers Index (PMI) in various countries.
“Countries such as those in Europe are still experiencing contractionary PMI. This is all what causes global GDP in 2024 to still be weak or not yet recovered compared to last year,” he said.
