We have observed that the prices of global commodities, including of food and energy, surge as an additional impact on the global supply chainJakarta (ANTARA) - The conflict between Russia and Ukraine has exerted a heavy toll on the global economy, with poor and low-income nations especially bearing the brunt, Fiscal Policy Agency Head at the Finance Ministry Febrio Kacaribu stated.
During the G20 Side Event Virtual Seminar on Wednesday, he explained that this resulted from the economic sanction imposed by developed countries against Russia that pressures global trade.
The G20 is an international forum comprising 19 countries that work together to handle major issues. Indonesia is holding the presidency of the grouping this year.
This pressure disrupts supply and raises inflation, which in the end, affects countries in the world, especially poor and low-income nations.
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"We have observed that the prices of global commodities, including of food and energy, surge as an additional impact on the global supply chain," he noted.
This increasingly dire geopolitical situation has affected the currency market as well as economic stability. It also impairs recovery in several countries.
The pressure of debt in poor and low-income countries also rises significantly as a result of the surge in global commodity prices.
The OECD estimates that the global economy will decline by one percent if the conflict continues and inflation will rise by 2.5 percent.
Meanwhile, the IMF has also forecast that global growth this year will drop down by 0.8 percent, i.e., from 4.4 percent to 3.6 percent.
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In addition, inflation in developed countries is projected to increase by 1.8 percent, while developing countries' inflation will rise by 2.8 percent.
To this end, Kacaribu stressed that Indonesia's G20 Presidency has a major responsibility to address challenges and risks arising from the current global and regional economic conditions.
These various global risks can be overcome together, as the COVID-19 pandemic has made the world more connected and dependent on one another, he stated.
"We learn that our economy is pressured due to the COVID-19 pandemic. However, strong international cooperation is proven to be more important in handling this challenge," he remarked.
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Translator: Astrid F H, Fadhli Ruhman
Editor: Fardah Assegaf
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