Early 2023, the IMF lowered Indonesia's economic growth projection to 4.8%.

In the January 2023 edition of the *World Economic Outlook* (WEO) report, the International Monetary Fund (IMF) projected that Indonesia's economy will grow by 4.8% this year.

This projection is more pessimistic than before. In the October 2022 WEO edition, the IMF predicted that Indonesia's economic growth in 2023 could reach 5%.

The IMF did not detail the reasons behind the downward revision of the projection. However, in general, the IMF stated that several risks are looming over the global economy this year.

The first risk is the condition of China, which is feared to fail to recover from the Covid-19 pandemic.

"With still low population immunity and inadequate hospital capacity, especially outside major cities, health issues could hamper China's recovery," said the IMF in the January 2023 WEO.

"This could affect various parts of the world, especially due to decreased demand and supply chain problems," it continued.

Decreased demand from China also has the potential to disrupt Indonesia's economic growth. This is because China is Indonesia's largest non-oil and gas export market.

Throughout 2022, Indonesia exported non-oil and gas commodities worth USD 63.5 billion to China, while exports to other countries were significantly lower.

Besides the issue of China, the IMF assesses that the global economy this year is vulnerable to disruption from the escalation of the Russia-Ukraine war, debt pressure in many countries, inflation rates, and increasingly sharp geopolitical fragmentation.

"International sanctions against Russia have divided the world into blocs and intensified pre-existing geopolitical tensions, such as trade disputes between the United States and China," said the IMF.

"Fragmentation could increase, resulting in increased restrictions on the movement of capital, workers, international payments, and hindering multilateral cooperation in the provision of commodities in the global market," it continued.