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Recession, climate change, may affect 2023 economy, says Sri Mulyani

Tempo - January 9, 2023

Antara, Jakarta – Finance Minister Sri Mulyani said that Indonesia will need to remain vigilant against a number of risks that many experts predict to hamper many countries in 2023, such as economic recession, debts, geopolitical turmoil, and climate change.

"I would like to explain a number of reasons for us to be wary about [in 2023] before our optimism [for 2023]," said Mulyani at the CEO Banking Forum in Jakarta on Monday, January 9, 2023, as quoted by Antaranews.

One of the signs of an impending recession, according to Sri Mulyani, is the International Monetary Fund (IMF) forecast of 2.7 percent global economic growth. This prediction is lower compared to the 2022 economic growth prediction of 3.2 percent, and well below the actual growth realization of 6 percent in 2021.

IMF predicts 30 to 40 percent of the world's economies will experience recessions in 2023.

Another aspect in addition to the threat of a recession is a situation where state debts are no longer sustainable in 2023. There are more than 63 countries in the world that are either finding themselves in a non-sustainable debt or are on the brink of falling into such conditions.

"In the year 2023, the world must tame inflation by raising interest rates when the debt stock is high. It will certainly have an impact, not just the recession, but in some countries that have high debt may find themselves in a debt crisis," the Minister elaborated.

She elaborated that climate change is also a major topic at the G20 one of which is the aspect of climate change risks in every budget planning decision in the financial sector.

"Including banking, you will experience regulations that must be considered where climate change is a recognized risk factor that can affect not only sustainability but is also systematically important," said Sri Mulyani.

Source: https://en.tempo.co/read/1677423/recession-climate-change-may-affect-2023-economy-says-sri-mulyan