REPUBLIKA.CO.ID, LOS CABOS - President Susilo Bambang Yudhoyono (SBY) expressed concern over the increasing tension in the Middle East that potentially undermined global economic conditions. He conveyed his concern to leaders of noted private companies, experts from universities, and international organisations, during his keynote speech at the Business Group of 20 Summit with state leaders, on Monday.
SBY said the ongoing tension in the region potentially increased global crude prices, even though the price was currently declining. He added that a hike in global crude prices would hamper the growth of the world's economy, especially the economies of countries dependent on oil.
"This may lead to stagflation, reduction of production, and recession," he noted.
As a result, he added, the current financial crisis in the euro zone would be worsened by uncertainty regarding global crude prices. "The economy which is already saddled with crisis debt and recession would be made worse if armed conflicts disrupt oil flows," the Indonesian head of state said.
SBY said last year the global economy was estimated to lose 8 trillion USD due to tension in the Middle East. Various international organizations predicted that the world economy would slow down this year, he added.
The IMF projects that the world economic growth would drop from 4.0 percent in 2011 to 3.5 percent this year. While the OECD predicts the euro zone economy will contract 2.0 percent in 2012.
The World Bank predicts that the Asia-Pacific region`s economy will slow down from 8.3 percent in 2011 to 7.6 percent in 2012. It also predicts that developing countries` growth, collectively, would slow to 5.3 percent this year, from 6.1 percent in 2011 and 7.4 percent in 2010.