Impact Of Russia's Invasion Of Ukraine, Indef: Global Economic Recovery And Indonesia Predicted To Slow Down

JAKARTA - The war between Russia and Ukraine will certainly have an impact on the world's economic recovery after the COVID-19 pandemic. Indonesia as a world commodity producer will also be affected by the global economic slowdown.

Indef researcher, Eisha M Rachbini revealed that there were several impacts of the Russian invasion of Ukraine, especially on the global economy. First, the post-covid world economic recovery, with the threat of inflation.

According to Eisha, the threat of inflation has now been seen in several developed countries such as the United States. In fact, it feels as far as Indonesia. He also said that Russia's invasion of Ukraine also led to an increase in world commodity prices.

"If the war continues, the global economic recovery is also in danger of being lower than initially predicted," he said during the Indef discussion 'Economic Impact of the Russo-Ukrainian War', quoted on Sunday, February 27.

According to Eisha, global economic growth is predicted to be at the level of 4.4 percent in 2022 and 3.8 percent in 2023. For developed countries 3.9 percent in 2022 and 2.6 percent in 2023. Meanwhile, developing countries are 4.8 percent in 2022, where previously in 2021 economic growth was at 4.7 percent.

"Then ASEAN will start at 5 to 5.6 percent in 2022 and 6 percent in 2023. Meanwhile, Indonesia will have 5.6 percent in 2022 and 6 percent in 2023," he said.

Meanwhile, world commodity prices in 2022 have increased. Because Russia is one of the world's producers of petroleum and the mining industry such as nickel, aluminum and palladium.

"Russia and Ukraine are the main exporters of wheat. Russia is also a producer of potassium carbonate (potash) as raw material for fertilizers. The risk of war will have an impact on rising oil prices which are estimated to increase to more than 100 dollars per barrel for brent oil prices as of February 24, 2022, " he said.

According to Eisha, fuel prices increased in the United States and Europe by 30 percent. If the conflict is prolonged, it will have an impact on the global supply chain.

"The supply chain is currently experiencing logistical bottlenecks due to COVID-19 which has triggered an increase in commodity prices. If commodity supply and shipping logistics are hampered, and key infrastructure, such as ports in the Black Sea area are damaged by war, developed countries can impose sanctions on commodities banned Russia," he said.

Eisha said it would definitely worsen commodity prices. Due to low global supply, excluding Russian natural resource commodities.

Not only that, said Eisha, the impact will spread to the financial market. Regarding the sanctions imposed by the US on Russian financial market players and tech companies.

"This is a serious economic impact to Russia, but not fatal, as Russia might be possible to get help from China (finance and trade relationship). Commodity prices increase, inflation, global economic situation will change the scenario of the Fed to increase interest rate, " he explained.

While the impact on Indonesia, Eisha said Indonesia's economic growth will be affected by the global economy and slow down the economic recovery.

"Slowing global economic growth will also slow down the economic recovery of emerging markets, such as Indonesia," he said.

Where the domestic financial market at the exchange rate, the JCI high inflation due to a commodity shock, will encourage the Fed to raise interest rates. US inflation stood at 7.5 percent in January 2022, the highest figure in 40 years. Including safe havens currencies such as US and JPY.

"It has an impact on the depreciation of the rupiah exchange rate, potential capital outflows, balance of payments (BoP). In the financial market, it can also have an impact on lending and corporate performance," he said.