‘Winter is coming’: Synergy, transformation crucial for growth, says BI

Amid the increasingly bleak condition of the global economy, Indonesia should look inward to strengthen interinstitutional synergy and continue with its economic transformation agenda, Bank Indonesia (BI) Governor Perry Warjiyo said on Thursday evening at the 2019 Bank Indonesia Annual Meeting (PTBI).

Also known as the "banker’s dinner", Perry recalled an analogy President Joko “Jokowi” Widodo made in October 2018 at the International Monetary Fund (IMF)-World Bank Annual Meetings in Bali.

“The trade war has negatively affected the economies of many countries, not just the United States and China. The President’s warning at the annual meeting that referred to Game of Thrones has become a reality. 'Winter is coming'. We need to be [ready] to face it,” said Perry.

The phrase comes from the popular HBO series.

In October 2019, the IMF said that the global economy was in a “synchronized slowdown” and further revised this year's growth to 3 percent, the lowest since the 2008 financial crisis. The Fund also slashed Indonesia’s Gross Domestic Product (GDP) growth by 0.1 percentage point to 5 percent this year to correspond with the global slowdown.

Indonesia should keep pursuing economic transformation to unlock higher growth potential, said Perry, and called on the government to continue developing domestic sources of growth like manufacturing and tourism.

Perry also noted that monetary policy was not always effective on its own and that “the central bank cannot be 'the only game in town' [sic]”. Therefore, a fiscal and monetary policy mix and structural reform was needed to drive the economy forward.

He added that the central bank would maintain an accommodative policy stance as it sought to stoke growth next year.

“With low inflation and a stable exchange rate, all our policy instruments will be directed toward stimulating economic growth. We will maintain these accommodative policies in 2020,” he said.

The central bank has cut its benchmark interest rate four times this year by a total of 100 basis points to 5 percent as growth slid to 5.02 percent in the third quarter, the lowest level in more than two years.