So Difficult The Condition Of An Advanced Country, Moreover, The Recession Oftes: Eating Hard, BBM Mahal

Illustration (Photo: Doc. Antara)

JAKARTA Minister of Finance (Menkeu) Sri Mulyani shared her knowledge of the latest global economic conditions that were increasingly difficult after going through the COVID-19 pandemic.

He said, currently various countries are competing to be able to meet national domestic needs. This simultaneous demand has caused many commodity prices to soar.

"The condition is exacerbated by the scarcity of several supplies. Food sources become difficult, energy prices become expensive. This is also due to geopolitical conditions between Russia and Ukraine," said the Minister of Finance when he was a resource person for the ITB alumni bond leadership training program, quoted Wednesday, October 26.

He explained that inflation is currently the worst inflation experienced by a number of countries. This condition occurs in the majority of developed countries, such as America, Europe, and Japan, which during the decade struggle with deflation.

"Suddenly they have inflation. This situation on the one hand, according to the policy makers in developed countries, assesses, oh this is inflation. Meanwhile, because the demand immediately went up first and the supply was late, inflation was inevitable," he said.

But in fact, inflation continues to rise. This caused these developed countries to sharply raise interest rates.

The Minister of Finance added that usually the central bank raises the interest rate at 25 basis points or 0.25 percent. Now it is common to see the central bank raise 50 to 75 basis points in one increase.

The policy of raising interest rates like this is not something trivial. Around the world, this developed country will have an impact and that is what it wants, namely the impact to weaken demand so that supply can work first. This is so that inflation drops," he said.

However, rising interest rates that cause and create potential for weakening demand needs to be observed. The Minister of Finance stated that this condition could cause recession.

"If the recession comes first but inflation has not decreased, then what will happen to the economy is recession plus inflation, called stagflation. That's what we don't want together," closed the Minister of Finance Sri Mulyani.