If (the conflict) continues (growth) can fall to 3.8 percent. It will depend on how long the conflict will continue  
Jakarta (ANTARA) - Bank Indonesia (BI) has revised its 2022 global economic growth forecast downward to 4.2 percent from 4.4 percent citing the Russia-Ukraine conflict.

"If (the conflict) continues (growth) can fall to 3.8 percent. It will depend on how long the conflict will continue," BI Governor Perry Warjiyo said during a press conference following a meeting of BI's board of governors in Jakarta on Thursday.

The escalation of the geopolitical tension, which has led to many countries imposing sanctions on Russia, has affected global trade transactions, commodity prices, and financial markets, even as the spread of COVID-19 has begun to show signs of abating, he said.

He predicted that economic growth in Europe, the United States, Japan, China, and India will potentially be lower than projected.

A potentially lower-than-projected global trade volume would be in line with the risk of deferred global economic recovery and supply chain disruption, he said.

"The global prices of commodities including energy, foods, and metal (have shown an) increase, thereby putting pressure on global inflation," he added.

Meanwhile, the escalation of Russia-Ukraine tensions, in addition to the Fed Rate hike and prompt normalization of monetary policies in other developed nations in response to increasing inflationary pressure as a result of the energy price hike, has added to the uncertainty about the global financial market.

This condition will lead to limited capital flows due to the risk of reverse capital flows to safe-haven assets and pressure on the exchange rate of developing countries' currencies, Warjiyo said.

However, he said he believes domestic economic growth will remain strong along with the declining transmission of the Omicron variant of COVID-19 despite the rising risk of Russia-Ukraine geopolitical tension.

Therefore, the domestic economy is predicted to grow in the range of 4.7–5.5 percent this year.

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Translator: Agatha Olivia V, Suharto
Editor: Sri Haryati
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