The global economy is facing a perfect storm as a result of the coronavirus disease (COVID-19) pandemic, prolonged geopolitical tensions, soaring inflation, and tightening monetary policy. A darkening future has been projected and the worst is yet to come. Amid global uncertainty, governments have become less aggressive in their budget spending, while high inflation has led many central banks to tighten their monetary policy. Furthermore, the pandemic has left widespread scarring effects, such as unemployment, poverty, and inequality, particularly on vulnerable groups. Global challenges and lower economic growth of the major economies will also affect Indonesia’s economic conditions, as the country may experience slower growth as a spillover from its major trading partners. It is important for the world and Indonesia to address these challenges, particularly the scarring effects, through multilateral solidarity and better maintenance of prudent fiscal policy.

The Global Economic Outlook and the State of Indonesia