Jakarta: The World Bank (WB) revised down its 2022 economic growth forecast for Indonesia to 5.1 percent, from 5.2 percent due to the Russia-Ukraine war.
The figure is slightly higher than the economic growth forecast for East Asia and the Pacific, at five percent.
"Several countries, such as Malaysia and Indonesia, are not too susceptible to a commodity price hike caused by the war," World Bank chief economist for East Asia and the Pacific Aaditya Mattoo noted in a press briefingn on Tuesday.
China, Indonesia, and Vietnam have passed the pre-pandemic output level at this moment, while Cambodia, Malaysia, Mongolia, the Philippines, and Thailand are expected to do that later this year.
Mattoo noted that various upheavals caused by the war and related sanctions could have the most concrete impact on the East Asia and Pacific region, including commodity supply disruption, rising pressure on the financial sector, and declining global trust.
The East Asia and Pacific region's direct dependence on Russia and Ukraine for the import and export of goods and services and capital is still limited, but the war and related sanctions will likely raise food and fuel prices on an international scale at the expense of consumers and growth.
Commodity-exporting countries, such as Indonesia and Malaysia, can stem the international price hike more easily than commodity importing countries, such as Fiji and Thailand.
For this part, Mattoo suggested that the governments of East Asian and Pacific countries reconcile their spending needs on account of the increasingly tighter budget limitation through commitment to recover fiscal discipline and apply again fiscal regulations as planned by Indonesia to implement them in 2023.
Governments in the region also need to conduct fiscal reform through the enactment of laws and regulations to be implemented based on objective recovery steps, he stated.