Jakarta – The ongoing war in Ukraine could drag the world economy into a new, unprecedented crisis that would undo all progress Indonesia has achieved during the recovery period from the devastating health crisis caused by Covid-19, a top government official has said.
The country has been on a strong economic footing with a 35 percent rise in domestic and foreign investments during the first half of the year, surpluses in international trade, and a steady growth in the foreign exchange reserves that reached $130 billion in September, according to government data.
The national economy is projected to grow by 5.2 percent as the government has lifted nearly all social and travel restrictions related to Covid-19.
"We must refrain from being arrogant because everything can happen in the next six months," Coordinating Minister for Maritime Affairs and Investment Luhut Binsar Pandjaitan told participants of the Investor Daily Summit in Jakarta on Wednesday.
He was referring to conflict escalation in Russia's invasion of Ukraine that, under the worst-case scenario, could lead to a nuclear war.
"We are anticipating a perfect storm so anyone must be wary. The global economy in my opinion is highly uncertain," the retired army general said.
"Even a limited nuclear war would be catastrophic. People are willing to do everything when they are being cornered so we are preparing for the worst-case scenario."
Luhut added that according to his sources, there are no signs of an immediate peace settlement to the war in Ukraine, saying "it will stay for a long time".
"As we see today, Russia is shelling Kyiv again and also other cities in Ukraine. It will only make things worse," Luhut said.
The minister, who oversees at least seven ministries, stressed that the government is doing its best to tame inflation, stabilize the economy, and safeguard a favorable business climate in the country.
He said Indonesia is currently on firm financial grounds to stay away from the "28-country queue" for International Monetary Fund assistance.
The Finance Ministry recently announced that the state budget enjoyed a surplus of Rp 107 trillion ($7 billion) as of August.