TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Fasting economy
There is no question that this is a challenging time for all, as we are facing a fraught period of geopolitical alignment and an increasingly volatile global economy.
Change Size
Muslims perform their first tarawih (Ramadan evening prayers) at 99 Kubah mosque in Makassar, South Sulawesi, on March 22. The government has set Thursday as the start of this year’s Ramadan. (Antara/Arnas Padda)
I
ndonesian Muslims began on Thursday the holy month of Ramadan, during which followers of the faith are obliged to refrain from gratifying their base desires from dusk until dawn. It is largely described as a “training period” for believers to practice humility and learn more about their spiritual side.
The holy month, in reality, is also a month of festivities, during which consumer spending is expected to increase as people stockpile their Ramadan supplies – nothing beats a good sahur (predawn meal) and mouth-watering iftar dishes – while also having more meals out with relatives and friends who organize a bukber (iftar party). It is not unusual for a Muslim-majority country to see Ramadan, or Idul Fitri-driven inflation.
This year’s Ramadan may no longer be overshadowed by pandemic mobility curbs or strict protocols, but, alas, we are now facing a multitude of economic risks.
In recent years, the world’s central banks have been waging a war against inflation that was driven by both the pandemic and the war in Ukraine. The result is a gradual increase of interest rates to keep spending low, which is not without its consequences.
Only recently, the Silicon Valley Bank collapsed. The California-based bank, the United States’ 16th largest bank and the go-to bank for tech start-ups, failed to hedge the risk of exposure to the US Federal Reserve’s aggressive rate hike. Swiss bank Credit Suisse later made headlines after declaring insolvency, leading to its take-over by its rival, UBS.
Bank Indonesia is upbeat that inflation would remain under control, keeping its interest rate unchanged for the second time in a row last week. It said core and headline inflation figures had both dropped faster than expected and expressed confidence that core inflation would stay between 2 and 4 percent in this year’s first half.
Statistics Indonesia has warned the government of potentially higher inflation during Ramadan, citing the trend of rising prices during the holy month in previous years. Some of the commodities that usually contribute to the inflation rate during Ramadan are household fuels, cooking oil, beef and chicken, according to the agency.
The monthly inflation rate surged by 0.68 percent during Ramadan in 2019. It fell to 0.08 and 0.13 percent in 2020 and 2021, respectively, due to pandemic restrictions, before surging to 0.95 percent during last year’s Ramadan, when the restrictions were lifted.
While the central bank uses its monetary policies to battle inflation, the government needs to ensure that we have enough food supply to control prices. It has allocated Rp 104 trillion (US$6.8 billion) for food resilience programs. Some of the allocated funds (Rp 22.5 trillion) will be transferred to the regional governments.
The government has also moved to ensure the availability of the government-sponsored cooking oil, MinyakKita, ahead of the fasting month. The highly popular commodity became harder to find and its price went up from the set retail price of Rp 14,000 to Rp 20,000 earlier this year. A meeting between relevant ministers led by Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan decided to increase the crude palm oil (CPO) allocations for domestic consumption by 50 percent, from 300,000 to 450,000 tonnes per day.
There is no question that this is a challenging time for all, as we are facing a fraught period of geopolitical alignment and an increasingly volatile global economy. We have no choice but to be more cautious of the prevailing risks and more resilient in weathering the adverse impacts of any disruptions on the global political-economic order.
This Ramadan, Indonesian Muslims are, again, subjected to economic austerity. This, however, should not affect how they observe the holy month, which was never intended to be a threat to the economy nor a cause of headache to policymakers.
So, Ramadan Mubarak, may you have a blessed and joyous iftar.
