The United States and Europe will clearly face a very high potential for a recession, why? (This is) because their inflation is very high, the highest in 40 years and is currently being responded to by increasing benchmark interest rates and tighteni
Jakarta (ANTARA) - A global recession would affect oil and other commodity prices in 2023, according to Finance Minister Sri Mulyani Indrawati.

"The United States and Europe will clearly face a very high potential for a recession, why? (This is) because their inflation is very high, the highest in 40 years and is currently being responded to by increasing benchmark interest rates and tightening liquidity," Indrawati noted at the 100 Indonesian Economist Workshop on Wednesday.

At first, the central banks in the US and Europe still considered the inflation to be temporary due to the disruption caused by the COVID-19 pandemic. However, when the conflict between Russia and Ukraine began to emerge, oil is also being used as a tool for one of the instruments of war, she stated.


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Hence, the minister believes that if various developed countries enter recession, the demand for oil will decrease and the pressure of rising oil prices is expected to decrease, thereby reducing the oil price, from US$100 per barrel.

Currently, the price of oil has begun to decline to lie within the range of US$94 per barrel after briefly rebounding at the level of US$126 per barrel.

In addition to the potential for a recession, Indrawati said that another factor that would affect the world oil and commodity prices was the prolonged conflict between Russia and Ukraine.

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"As long as there is a war, it means there will always be supply disruptions because Russia is under an embargo. Yesterday, we also heard that the United States would try to create a price gap for Russian oil that has now been adopted by G7 countries," she remarked.

Hence, the State Treasurer assessed that world oil prices will still be uncertain in future with these various factors and will certainly affect the state budget.


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Translator: Agatha Olivia V, Resinta S
Editor: Fardah Assegaf
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