Jakarta. The threat of a global recession has diminished, yet the World Bank forecasts a continued slowdown in global growth for the third consecutive year, dropping from 2.6 percent last year to 2.4 percent in 2024. Meanwhile, Indonesia's gross domestic product growth is anticipated to decelerate in line with the weakening outlook.

Indermit Gill, Chief Economist and Senior Vice President of the World Bank Group, said that mounting geopolitical tensions, slowing growth in major economies, sluggish global trade, and the tightest financial conditions in a decade pose near-term risks to the world economy. 

"Without a major course correction, the 2020s will go down as a decade of wasted opportunity. Near-term growth will remain weak, leaving many developing countries, especially the poorest, stuck in a trap with paralyzing levels of debt and tenuous access to food for nearly one out of every three people," he said in a statement on Wednesday.

In the East Asia and Pacific (EAP) region, growth rebounded to 5.1 percent in 2023, up from 3.4 percent in 2022. This was primarily driven by a brief surge in economic activity in China early in the year following the lifting of pandemic restrictions. However, the effects of China's reopening quickly diminished, with projected growth slowing to 4.5 percent in 2024 and further to 4.3 percent in 2025, mainly due to weaker domestic demand.

Given the strong trade links between China and other economies in the region, slower-than-expected growth in China could have negative spillovers, impacting demand and activity across the region. Commodity exporters like Indonesia may experience reduced demand and prices.

The World Bank forecasts a slowdown in Indonesia's gross domestic product (GDP) growth, dropping from 5.3 percent in 2022 to 5 percent in 2023, and further declines to 4.9 percent in both 2024 and 2025.

Indonesia's Finance Minister, Sri Mulyani Indrawati, projects the country's economic growth to be around 5 percent in 2023, with a further increase to 5.2 percent in 2024. 

Sri Mulyani attributes the robust growth outlook to relatively high domestic consumption, increased economic activity during religious holidays, year-end holidays, pre-election periods, and controlled inflation to preserve public purchasing power. 

"Investments in both the building and non-building sectors show an increasing trend, in line with the progress of national strategic projects," she said on Jan. 2, 2024.

Mulyani expects the inflation rate to remain low throughout 2023, reaching 0.41 percent monthly and 2.61 percent annually.

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