Indonesia well prepared to handle global financial uncertainity

Indonesian Financial sector
Indonesian Financial sector

Indonesia has never been more prepared to handle global economic uncertainty, stemming from concerns like China’s slowdown and depressed commodity prices, the head of the International Monetary Fund said on Tuesday.

IMF Managing Director, Christine Lagarde at a joint press briefing with Indonesia President Joko Widodo told reporters that Indonesia was well-prepared to withstand possible economic turmoil.

“We at the IMF are convinced that Indonesia is much better prepared than ever before to actually face those headwinds,” Lagrade said.

Lagarde earlier gave a speech on global economic growth at Indonesia University.

She warned emerging economies like Indonesia to “be vigilant for spillovers” from China’s slowdown, tighter global financial conditions, and the prospects of a U.S. interest rate hike.

“The IMF expects the global growth to remain moderate and likely weaker than we had anticipated,” she said.

The IMF in July forecast global growth at 3.3 percent this year, slightly below last year’s 3.4 percent.

Lagarde said China’s economy was slowing, although not sharply or unexpectedly, as it adjusts to a new growth model.

“The transition to a more market-based economy and the unwinding of risks built up in recent years is complex and could very well be somehow bumpy,” she added.

She said that Southeast Asia’s largest economy had the “right tools to actually react” to the global volatility, as it had sound public finances and a relatively small deficit.

“We believe that the authorities have the policy tools and financial buffers to actually manage this transition,” she said.

Lagarde will give keynote speech on Wednesday (September 2) in a annual conference with Indonesia Central Bank.

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