Keeping Jambi's Economic Rate Stable

Since the second quarter of 2021, Jambi Province's economic growth has gradually grown again, after contracting throughout 2020 until the first quarter of 2021 due to the impact of the Covid-19 pandemic. On Friday (5/82022), the Central Statistics Agency (BPS) of Jambi Province released economic growth figures for the second quarter of 2022 (April-June period). As a result, in that period, our economy grew by 5.41 percent year on year (yoy) or 4.77 percent compared to the previous quarter (quarter to quarter or q-t-q). However, the World Bank has warned of the great potential for the world economy to enter the brink of recession in the next two (2) years. Because, the world economy is faced with great risks. The trigger for this world economic recession was the eruption of the Russian military invasion of Ukraine. It has been more than six (6) months, this military invasion is still continuing. Various diplomacy has been carried out to end this invasion, including by President Jokowi. However, so far it has not shown positive developments. The military offensive has not abated. One of the impacts of this invasion was the disruption of the supply of various commodities (energy, food, and minerals). Because, these two countries are one of the important commodity barns. As long as this military invasion lasts, the price of this important commodity will tend to stay at a high level. In fact, commodity prices, especially cheap energy, are needed to drive the engine of the economy. China's economic growth dimmed in the second quarter of 2022 to 0.4 percent (YoY) from the same period in 2021 of 18.3 percent (YoY). Of course, the slowing down of China's economic growth will have an impact on the economies of other countries, one of which is Indonesia. This is because China contributes about 20 percent of the value of Indonesia's exports. In June 2022, Chinese imports into Jambi amounted to 16.73 percent of the total imports. The situation is getting more complicated, because central banks in developed countries, in particular the Fed, are increasingly aggressive in raising their policy interest rates in an effort to reduce inflation that continues to soar. An increase in interest rates will pull back the ongoing process of economic recovery. As an open economy, the Indonesian economy will certainly not be immune from the risks and policy changes of these developed countries. The potential for slowing domestic economic growth is very open. However, considering that the main motor of Indonesia's economic growth is household consumption. Thus, maintaining the vitality of household consumption is very important, so that the pace of economic growth does not weaken rapidly. As has happened in other developing countries. The problem is, in order to maintain the vitality of consumption, low and stable inflation is needed. Throughout 2015-2019, the average annual inflation was below 4 percent. Unfortunately, inflation this year will tend to be higher. Based on Bank Indonesia's projections, inflation by the end of 2022 could reach 4.5 percent (YoY). The inflation rate for the calendar year and year on year in Jambi City this month are 6.96 percent and 8.55 percent, respectively. Meanwhile, the inflation rate for the calendar year and year on year in Muara Bungo City was 6.94 percent and 8.55 percent, respectively. Jambi City and Muara Bungo City became the cities with the highest calendar year inflation nationally, from January to July 2022 out of 90 CPI cities in Indonesia. For this reason, communication and policy synergies must be maintained so that inflation spikes do not exceed expectations. So far, the government has taken various ways to reduce volatile price inflation (foodstuffs) by maintaining a secure supply and accelerating the distribution of food ingredients. Meanwhile, to reduce price inflation, which is regulated by the government by increasing fuel subsidies to Rp 520 trillion. This subsidy must be re-examined, because it doesn't seem right on target. And it was shifted to strengthen social protection assistance for the lower classes who are indeed the ones who will be hit hard by rising inflation. (Jambi/Nerwilis data)