Indonesia should be wary of international events that would have a spillover impact on the economy globally, including of the nation, Finance Minister Sri Mulyani Indrawati stated at a press conference here on Monday.

“These global events should be something that we need to be wary of in managing our economy,” she stressed.

Indrawati highlighted several of these global issues, such as the tapering by the Federal Reserve and the debt limit in the United States (US).

Others to watch out for are the tapering by the Europe Central Bank (ECB) and Bank of England (BoE) as well as the impact of Brexit on labor shortages and supply disruption.

“The impact of Brexit would cause disruption in the supply side, both in terms of labor and inflation,” the minister elaborated.

Moreover, Evergrande’s default risk, which in spite of being capable of paying off its debt, is not yet finished, she stated.

In addition, potential stagnation of China’s economy that will affect the world’s economy starting from commodity prices to also the general economy.

“All of these combined together will surely affect Indonesia’s economy,” Indrawati pointed out.

There is also the risk of energy commodity price fluctuations due to China and the winter energy crisis, the scarcity of input, and the rising wages and shipping costs, she remarked.

Moreover, the increasing produce price and the risk of stagflation are other aspects to look out for, Indrawati stated.

The potential impact of these various issues include the rising financial market volatility.

This volatility comprised the reduction in capital flow, rising interest in safe haven assets, the strengthening of the US dollar, the increase of yield, including sovereign debt papers (SBNs), and the lowering of stock.

These impacts also affect the stagnation of global economic growth, such as the disruption of the domestic supply chain, which would alter the manufacturing industry and reduce demand for export goods of US and China’s trade partner.

Source: Antara News