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The impact of rising oil prices on the economy of a country

Oil prices continue to soar lately have an impact on the lives of the most important climatic investation.Yang whether the government will also adjust the price of oil / fuel in the country or not. If yes, of course, of course, can be very different economic conditions. Normally the fuel price hike will lead to higher production costs, increase in distribution costs and also increase inflation.

The prices of goods are becoming more expensive, purchasing power decline, because they fixed income. Tip the economy will stagnate and the level of well-being disturbed.

On the other hand, more and more bad loans to increase, the most serious is the limited employment opportunities for businesses to adjust production in accordance with the rise in prices and a decrease in demand for goods.

The things above happen if fuel prices increased, What if not? Government subsidies on fuel will increase as well, why? Although our country an oil producer, in fact, to produce the fuel we still need oil imports of raw materials as well.

In the absence of fuel price hike, subsidies should be provided by the government are also getting bigger. Where the source of these subsidies cover? One is the increase in export earnings. Why be like that? Because of the increase in world oil prices also boosted the export prices of certain commodities, such as palm oil as crude palm oil (CPO) is the petroleum subsidy. Income from rising CPO prices will not be proportional to the amount of costs to be incurred for oil subsidies.

In connection with the above conditions is approximately policy is to be taken by the government?

If the increased fuel prices, the government’s image in politics will be disrupted, people certainly do not agree that the prices to be expensive, if the government bothered impacts is very broad, so, if it refers to the possibility that fuel prices will not be increased.

But the problem has not been done here, even though fuel prices are not raised, still the impact of rising world oil prices affect the economy of a country, including the investment climate.

Rising world oil prices make the cost of production increases. That means the selling price of imported goods will also be costly imports that will have an impact on inflation due to rising prices of imported goods.

The impact of this first, deposit and loan interest rate will not go down in the near future, the interest rates tend to rise, or at least still be inversely proportional to the price of the bond. This means that if interest rates rise, bond prices will likely fall. Thirdly, the interest rate unchanged also give different levels of interest in the foreign country with a relatively steady or even widened. (Endang Wahyuningsih)


Source : https://www.carajadikaya.com/dampak-kenaikan-harga-minyak-terhadap-kondisi-ekonomi-indonesia/