The war will lead to an oil price hike, which will eventually push inflation, particularly volatile price inflationJakarta (ANTARA) - The Institute for Development of Economics and Finance (Indef) has projected that the Indonesian economy will contract 0.014 percent this year due to the Russia-Ukraine conflict.
"The war leads to an oil price hike, which will eventually push inflation, particularly volatile price inflation," chief of Indef's Macroeconomic and Financial Center, Rizal Taufikurahman, said during an online public discussion in Jakarta on Wednesday.
The volatile price inflation has begun to move, particularly for such commodities as oil, gas, and meat, he noted.
The imminent price rise for foodstuffs during the fasting month of Ramadhan is expected to add to the volatile price inflation, he said.
"Moreover, the pandemic is still ongoing so our economy will slow down in the short run," he forecast.
He predicted that global crude prices will increase 1.14 percent due to uncertainty over the Russia-Ukraine conflict. Accordingly, the prices of other commodities will follow suit in view of the vital role of oil in all economic sectors, he explained.
The price of meat is expected to increase 0.07 percent, food 0.05 percent, processed food 0.08 percent, and transportation and communication 0.1 percent, he said.
He expressed the hope that the government will soon anticipate a possible rise in the prices of various commodities over the short run.
"Moreover, we don't know how long the war will last," he remarked.
The drop in Indonesia's economic growth due to the Russia-Ukraine conflict will not be significant compared to that of China and the US, which are expected to experience an economic contraction of 0.022 percent and 0.023 percent, respectively, he said.
The Indonesian economy grew 3.69 percent in 2021 after having contracted 2.07 percent in 2020, according to Statistics Indonesia (BPS).
"In the fourth quarter of 2021, the Indonesian economy expanded 1.06 percent qtq (quarter-to-quarter). If I compare it with the fourth quarter of 2020, it grew 5.02 percent (year-on-year/yoy). Cumulatively, the economy grew 3.69 percent throughout 2021," BPS chief Margo Yuwono said at a press conference in Jakarta on Monday.
Related news: Infrastructure development to boost long-term economic growth: Nazara
In 2021, the Indonesian economy largely hinged on the handling of the COVID-19 pandemic, he said.
For instance, although the economy contracted 0.74 percent (yoy) in the first quarter of 2021, it performed far better than in 2020, when COVID-19 spread and exerted massive pressure on the economy, he added.
Related news: No country suspends elections for securing economic growth stability
Translator: Agatha Olivia Vi, Suharto
Editor: Rahmad Nasution
Copyright © ANTARA 2022
