Jokowi: World ‘paying a heavy price’ for Russian war in Ukraine

Tria Dianti
2022.10.11
Jakarta
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Jokowi: World ‘paying a heavy price’ for Russian war in Ukraine People shop at a traditional market in Depok, on the outskirts of Jakarta, June 2, 2022.
. [Ajeng Dinar Ulfiana/Reuters]

Without blaming any country, Indonesian President and G20 chair Joko “Jokowi” Widodo on Tuesday said at a business event that the world was “paying a heavy price” for the Russian war in Ukraine.

Jokowi hosts the G20 summit in Bali next month where analysts have said he hopes to steer world leaders towards a solution for what his government says could be a global economic downturn more widespread than the1998 Asian financial crisis.

“After the war between Russia and Ukraine, we know that [global] economic growth for 2023 had previously been projected at 3 percent, but the projection was recently cut to 2.2 percent,” Jokowi said in a speech opening a business forum in Jakarta.

“[The world] is paying a very high price for the war,” he added, about Russia’s invasion of Ukraine in February.

The Indonesian president said 66 countries were deemed vulnerable and could face economic collapse as the COVID-19 pandemic and the war in Ukraine contributed to food, energy and financial crises.

“Currently 345 million people in 82 countries suffer from acute shortages and hunger. This means that there has been a food crisis,” said Jokowi.

However, he expressed optimism that Indonesia would fare better than many countries, with inflation under control at 2.9 percent.

Airlangga Hartarto, Jokowi’s chief economics minister, said that 28 countries were in need of financing from the International Monetary Fund (IMF).

“This is likely to be bigger than the 1998 crisis when it happened in several ASEAN countries,” said Airlangga, referring to the 1997-1998 Asian financial meltdown that led to the downfall of long-time President Suharto.

According to a report released by the World Bank last month, the world may be heading towards a global recession in 2023, with a string of financial crises in emerging market and developing economies.

“Geopolitical tensions are casting a long shadow over global growth prospects, with the Russian Federation’s invasion of Ukraine magnifying pre-existing supply-side challenges and intensifying volatility in commodity markets,” said the report titled “Is a Global Recession Imminent?”

World Bank Group President David Malpass said global growth was slowing sharply, “with further slowing likely as more countries fall into recession.”

“My deep concern is that these trends will persist, with long-lasting consequences that are devastating for people in emerging market and developing economies,” he said, in a statement accompanying the report.

Meanwhile, speaking in Washington, Indonesia’s finance minister Sri Mulyani said food insecurity and fertilizer shortages caused by Russia's war in Ukraine may worsen in 2023, reported Reuters news agency.

“We're heading into 2023, which is going to be much, much more highly risky for this food problem,” she told reporters after an inaugural joint meeting of G20 agriculture and finance ministers.

‘Inaction is immoral’

A day earlier, Jokowi’s predecessor, former President Susilo Bambang Yudhoyono, said Monday that the world could be facing security, economic and environmental crises simultaneously.

“There are two pieces of bad news right now about the world. First, a global economic recession is likely to occur. Second, the war in Ukraine is increasingly endangering international security,” Yudhoyono said on Twitter.

“If the war in Ukraine rages out of control, a world war involving the use of nuclear weapons could become a reality,” he said.

“I call on world leaders, including the United Nations, [to] take real action to save our world. Inaction is immoral. Use the G20 forum in Bali to save our world, to save our planet. Lower your ego. Negotiations and dialogue are the answer,” he tweeted.

The build-up to the G20 summit, scheduled for Nov. 15-16 on the Indonesian island of Bali, has been fraught in recent months with divisions within the grouping over Russia’s war in Ukraine.

Western countries have condemned Russia for invading Ukraine, but other members, including China, Indonesia and India, have refused to follow suit and have maintained ties with Moscow.

As this year’s holder of the rotating G20 presidency, Jokowi has sought unity within the grouping of the world’s 20 leading industrialized and emerging economies ahead of the summit.

In March, U.S. President Joe Biden, who is expected to attend the summit, urged Jokowi to invite Ukraine as a guest if Russia was not expelled from the group for invading its smaller neighbor.

Jokowi said in August that Russian President Vladimir Putin and Chinese leader Xi Jinping were both expected to attend the G20 summit.

‘Abandon high-cost projects’

Bhima Yudhistira, director at the Jakarta-based Center for Economic and Law Studies (CELIOS), urged the government to immediately prepare a policy package to anticipate the looming recession, instead of issuing repeated warnings about an impending global crisis.

“If they are aware that there will be a perfect storm, they should immediately appoint a coordinator to face the crisis because if you look at it now there are only policies to deal with the pandemic, while the variables have changed. Protocols for environmental, economic and security crises need to be implemented immediately,” he told BenarNews.

“Quick action such as fiscal incentives, taxation and others is better than crisis fear-mongering,” he said.

The government should abandon high-cost projects and introduce a stimulus package, including lowering value-added tax from 11 percent to 7 percent, providing fertilizer subsidies, and pushing for an energy transition, he added.

“Immediately make changes to the budget to shift to social protection. It takes at least 4 percent of GDP to avert a crisis,” he said.

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