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.
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search results
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search resultsIndonesia's strategy in rising US-China trade tensions
Let us begin by understanding the main issue that the US economy faces.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Shipping containers are seen at a port in Qingdao, in China's eastern Shandong province on April 13, 2018. (AFP/-)
W
hile 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 major currencies.
On the real sector front, ideally, the US should go through the long painful process of improving its productivity and labor skills, by all means “working and learning harder and saving more”. Productivity is not everything, but in the long run it is almost everything (Paul Krugman, 1994).
