The Impact of Global Economic Recession and Inflation on the Palm Oil Industry: Case Studies and Opportunities in Southeast Asia

Abstract

The rise in worldwide need for vegetable oils in recent years has resulted in higher incomes for all countries involved in the palm oil sector. The palm oil sector has played a role in boosting the economy, generating higher incomes, providing employment opportunities, and alleviating poverty for both farming and non-farming families. The World Bank additionally disclosed a report titled Commodity Markets Outlook: The Influence of the War in Ukraine on Commodity Markets. The repercussions of the Russo-Ukraine War in 2022 led to a surge in global commodity prices as a result of the reaction to the Russian-Ukrainian conflict. Once both concerns are addressed, it is crucial for the international community to act in order to prevent inflation and economic downturns within the next three years (2022-2023). This study employs a method of reviewing literature. This literature review reveals that the global economy is projected to go through a recession along with inflation (stagflation). Globally, a decrease in economic growth could diminish the buying power of the world population. Economic growth has decelerated and inflation has been relatively high in the main market areas for palm oil, such as Europe, India, China, sub-Saharan Africa and North Africa. The economic recession has led to a decrease in the purchasing power of palm oil importing countries while high global inflation has caused production costs to rise.