The World Bank is urging countries, including Indonesia, to improve policy clarity for businesses as a sustainable way to drive economic growth. This advice comes in light of the limited fiscal and monetary measures that many countries are facing amid prolonged global uncertainty. Manuela Ferro, Vice President of the World Bank East Asia and Pacific, emphasized the importance of addressing policy uncertainty, especially with many countries facing changes in leadership this year. She urged new administrations to communicate their policy directions early to businesses and households.
Ferro highlighted the challenges in providing fiscal or monetary stimulus to sustain growth over the long term. She pointed out that businesses need clarity about the investment regime they operate in. She also mentioned that implementing competition-enhancing policies would attract more investors into economic activities. The upcoming elections in many countries, including Indonesia, will have significant implications for policy direction and economic growth.
In Indonesia, Prabowo Subianto has been announced as the winner of recent polls and will be sworn in along with his running mate Gibran Rakabuming Raka in October. The IMF has issued warnings about escalating fiscal risks such as tight financing conditions and growing concerns about debt vulnerabilities. It is crucial for countries to proactively manage these risks to ensure sustainable economic growth.
Ferro’s message highlights the importance of clear communication from governments when it comes to policy direction. As many countries face changing leadership this year, it is crucial for them to provide clarity on their policy direction early on so that businesses can plan accordingly. Without clear communication, businesses may struggle to make informed decisions about investment opportunities and may hesitate to invest altogether.
Additionally, Ferro’s emphasis on competition-enhancing policies underscores the importance of creating an environment that fosters innovation and entrepreneurship. By attracting more investors into economic activities through competitive policies, countries can create new job opportunities and drive sustained economic growth.
Overall, Ferro’s message serves as a reminder that effective communication and competitive policies are essential components of sustainable economic growth. As countries face increasing fiscal risks and global uncertainty, it is crucial for them to take proactive steps towards managing those risks while also creating an environment conducive to innovation and entrepreneurship.
