in oil production by OPEC. Meanwhile, on the food commodity side, weather disruption due to the El-Nino phenomenon disrupted food production activities and could push up food prices. Inflation pressure is predicted to remain high in 2024 due to cost push inflation due to projected global commodity prices (energy and food) which were quite high, both energy and food commodities (Figure 4). In terms of energy commodities, prices were expected to remain high, especially for crude oil due to cuts Figure 4. World Energy and Food Commodity Price Index Projections (2016 = 100) 100.0 200.0 250.0 150.0 50.0 2019 2020 2021 2022 2023F 2024F Source: International Monetary Fund (IMF), October 2023 Commodity prices have decreased, but are relatively high 117.0 105.9 161.5 215.9 166.0 167.4 Second, uncertain geopolitical conditions (Figure 5), could trigger another disruption in the supply chain of primary goods and energy commodities, which could have an impact on increasing global inflation. Third, monetary policy by various central banks in the world was expected to last for a relatively longer period of time or what is known as “higher for longer” (Figure 6). The continued tightness of global monetary policy could suppress loan growth, which in turn could have a negative impact on global economic growth. In financial markets, tight monetary policy reduce global liquidity, which could ultimately trigger instability in the global financial system. Fourth, China’s economic recovery was lower than previously estimated due to slowing industrial activity and consumer demand. This was caused by the ongoing property crisis, weak consumer confidence and high unemployment rates in the productive age group. Figure 5. Movement of the Global Geopolitical Risk Index (3M-MA) 100 200 300 250 150 0 50 19 Jan 19 Apr 19 Jul 19 Oct 20 Jan 20 Apr 20 Jul 20 Oct 21 Jan 21 Apr 21 Jul 21 Oct 22 Jan 22 Apr 22 Jul 22 Oct 23 Jan 23 Apr 23 Jul 23 Oct Source: Caldara and Matteo (2022), November 2023 Geopolitical risks are increasing, uncertainty remains high PT Bank Rakyat Indonesia (Persero) Tbk. 2023 Annual Report 191 Management Discussion and Analysis on Bank Performance
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