Get Ready! Sri Mulyani Reveals The Threat Of The World Financial Crisis Will Happen Soon: Social To Political Will Be Affected

Illustration (Photo: Doc. Antara)

JAKARTA - The Minister of Finance (Menkeu) Sri Mulyani revealed that the current global economic situation is not doing well and is shrouded by continuing uncertainty.

According to him, the war in Ukraine has become a strong catalyst in increasing prices of important world commodities. This was followed by rising inflation in almost all countries.

“Increases in prices and inflation have been responded to in the form of tighter monetary policy and increased interest rates. This causes the cost of money from each financing to be more expensive,” he said while attending a working meeting with the DPD RI at the Senayan Parliament Complex, Jakarta, Tuesday, June 7.

The Minister of Finance added that the increase in interest rates and liquidity will tend to create volatility or shocks in global financial markets, especially in the government securities market sector.

"We have to anticipate this. All over the world there is a trend where the risk is shifting, from the problem of disease that could have an impact on the social economy to the financial economy, now it is a financial problem that can have an impact on social and political problems," he said.

Furthermore, the state treasurer also explained that in the presence of high inflation and pressure from monetary tightening, the phenomenon of stagnation will emerge.

“This stagnation is high inflation which is responded to by tightening policies which then causes a recession or stagnation of the economy (economic growth stagnates or even declines). This will be a combination that we must be aware of and must be managed properly," he explained.

However, the situation in Indonesia is said by the Minister of Finance to be quite lucky because a number of commodities that have experienced a surge in selling value can actually be produced domestically.

"The rising prices of commodities around the world, such as gas, oil and coal, at least Indonesia has them, although some have to be imported," he said.

For information, one indicator of economic pressure is the rising inflation rate. Domestically, inflation has consistently risen since February 2022 from around 2 percent year on year (yoy) to more than 3.5 percent at the end of May 2022.

The situation is even worse in several countries where inflation has reached double digits, such as Turkey with 73 percent inflation, Argentina with 58 percent, Russia with 17 percent, Brazil with 12 percent, and the UK with 9 percent.