This may lead to stagflation, reduction of production, and recession"Los Cabos, Mexico (ANTARA News) - President Susilo Bambang Yudhoyono has expressed concern that the increasing tension in the Middle East could worsen global economic conditions.
He conveyed his concern to leaders of noted private companies, experts from universities, and international organisations, during his keynote speech at the Business Group of 20 Summit with state leaders, here on Monday.
President Yudhoyono said the ongoing tension in the region could make the global crude prices soar again, even though the price was currently declining.
He added that a hike in global crude prices would hamper the growth of the worls's economy, especially the economies of countries dependent on oil.
"This may lead to stagflation, reduction of production, and recession," President Yudhoyono noted.
As a result, he added, the current financial crisis in the euro zone would be worsened by uncertainty regarding global crude prices.
"The economy which is already saddled with crisis debt and recession would be made worse if armed conflicts disrupt oil flows," the Indonesian head of state said.
President Yudhoyono said last year the global economy was estimated to lose US$8 trillion due to tension in the Middle East.
Various international organisations predicted that the world economy would slow down this year, he added.
The IMF projected that the world economic growth would drop from 4.0 percent in 2011 to 3.5 percent this year, while the OECD predicted the euro zone�s economy would contract 2.0 percent in 2012.
Meanwhile, the World Bank predicted that the Asia-Pacific region`s economy would slow down from 8.3 percent in 2011 to 7.6 percent in 2012.
It also predicted that developing countries` growth, collectively, would slow to 5.3 percent this year, from 6.1 percent in 2011 and 7.4 percent in 2010.
(G003*M041/H-YH/INE/KR-BSR/O001)
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