TheJakartaPost
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Under the shadow of Trump’s trade war
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US President Donald Trump stands up after signing trade sanctions against China on March 22, 2018 in the Roosevelt Room of the White House. (AFP/Mandel Ngan)
T
he third quarter of 2018 may be the most tumultuous quarter for the Indonesian economy during Joko “Jokowi” Widodo’s presidency.
The Indonesian economy faced severe headwinds from several fronts: monetary tightening by the United States Federal Reserve, which increased interest rates; higher oil prices; the start of a trade war between the US and China; and the spillover from the financial crisis in Argentina and Turkey.
Global uncertainty spread, capital outflows from Indonesia intensified and the value of the rupiah against the US dollar dropped below Rp 15,000 for the first time since the 1998 political and economic crisis. All of these developments had a severe negative impact on Indonesia’s macroeconomic performance.
In the third quarter of 2018, real gross domestic product (GDP) growth weakened to 5.17 percent from 5.27 percent in the previous quarter, and the current account deficit rose to as much as 3.4 percent of GDP, reaching a quarterly record.
