Year 2022 is considered as a time of exit from the COVID-19 pandemic that hit the whole world 2 years earlier. People who were forced to stay at home at that time, their mobility increased again after the lockdown ended. As a result, the level of consumption rises which in turn raises the rate of inflation. When inflation rose at the beginning of last year, there was nothing to worry about. The monetary authorities also feel that this is reasonable, because it happened post-pandemic. However, Russia's invasion of Ukraine in March made food and energy prices rise so that inflation was even higher. It was at this point that the monetary authorities started to panic.
The world's central banks then raised their benchmark interest rate to reduce inflation. Nevertheless, inflation has still not subsided and the risk of a global recession is looming towards the end of 2022. In late 2022 to early 2023, it turns out that the situation is not as dire as was feared. Inflation in the United States, for example, has started to fall to a level of 6.5 percent. However, there is still another threat, namely the global banking crisis. Starting from the collapse of Silicon Valley Bank (SVB) in the US to the crisis that hit large European banks such as Credit Suisse and Deutsche Bank, global economic uncertainty has continued.
Economist and Chancellor of Atma Jaya Catholic University, Agustinus Prasetyantoko, said that the risk of recession, rising interest rates and a banking crisis will certainly affect domestic financial conditions. The capital market was volatile, the rupiah weakened, and pressure on Bank Indonesia to raise its benchmark interest rate increased. Nevertheless, from a trade perspective, when the Russia-Ukraine war was in turmoil, Indonesia's exports actually increased, bearing in mind that most of its export products are commodities. The increase in commodity prices will increase state revenues and reduce the budget deficit. "The point is that we are actually offset by the situation. Pressure from the financial channel is offset by the trade channel where exports are a buffer from emerging turmoil so that our economy remains resilient," he said.
According to Prasetyantoko, export performance supported Indonesia's economic growth which remained positive last year. Based on data from the Central Statistics Agency (BPS), Indonesia's economy will grow by 5.31 percent in 2022. He believes that in 2023 the Indonesian economy will still have a chance to grow above 5 percent. Therefore, he assessed that although Indonesia's exports were hoisted due to rising global food and commodity prices, making exports truly a buffer for the economy is a necessity for the future.
"So if we still benefit in 2022 it will actually be due to the aspect of commodity prices where most of our exports are commodity-based. So our homework going forward is to make our exports more sophisticated, which means the manufacturing sector," he said. In February 2023, Indonesia's trade balance recorded a surplus of US$5.47 billion.
Even though the current trade balance is still in surplus, the trend of export performance has begun to decline from its position in August 2022 US$27.86 billion in February 2023 to fall to US$21.4 billion. This occurred in line with the correction in commodity prices and reduced demand from several countries that were experiencing a recession. "This is also an achievement. Throughout 33 months, our trade balance has always been a surplus.
This is a situation that we should be grateful for and a luxury in the midst of a world that is currently in a recession like this, but the note is that this is very dependent on commodity prices. When commodity prices fall , then the surplus will also decrease," he said. Based on The Observatory of Economic Complexity MIT Media Lab, Economic Complexity Index (ECI), Indonesia in 2020 shows that Indonesia's exports still depend on coal briquettes and palm oil, respectively 8.78 percent and 10 percent of total exports. The ECI is an indicator showing that the more complex a product a country produces, the country has the potential to become a country with better income in the future.
Shifting export products from those that are dominantly commodity-based to manufacturing products is also a chore that must be done. He also appreciated the government's industrial downstream policy. The industrial downstream policy is expected to be able to strengthen the competitiveness of the national economy in facing the challenges of uncertainty in the current global economic conditions. Indonesia is also determined to become a global key player in the commodity-based downstream industry by reducing exports of raw materials and increasing downstream natural resource-based industries in the country. One of the commodities with large reserves in Indonesia is nickel, for which U.S. data. The Geological Survey shows that Indonesia's nickel reserves rank first, reaching 21 million tonnes
