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Jakarta Post

Indonesia's strategy in rising US-China trade tensions

  • Lili Yan Ing

    -

Jakarta   /   Tue, July 10, 2018   /  11:36 am
Indonesia's strategy in rising US-China trade tensions Shipping containers are seen at a port in Qingdao, in China's eastern Shandong province on April 13, 2018. (AFP/-)

While uncertainty persists amid escalating tensions in United States-China trade, Indonesia will remain neutral and maintain positive engagement.

Let us begin by understanding the main issue that the US economy faces. The US economy has been facing “twin deficits” of budget and trade. In Q4-2017, the US recorded a budget deficit of 3.4 percent of gross domestic product (GDP) and a current account deficit of 2.1 percent of GDP. With the current scenario of tax cuts and budget spending, JP Morgan estimates the US budget deficit will reach 5.4 percent of GDP in 2019.

On the monetary front, the US is projected to increase its 10-year bond interest rate to 3.25 percent by year-end. As of July 5, it reached 2.86 percent. The hike is expected to boost Federal Reserve interest rates, which would result in a strengthened dollar against the world’s m...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.