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Election year impedes more reform
The main message from the Annual Meetings of the International Monetary Fund and World Bank Group in Bali last week was that multilateralism should be kept to work and the trade war between the United States and China be stopped.
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The Jakarta Elections Commission (KPUD) has designated 267 places where citizens can make sure their names are on the list. (The Jakarta Post/Dhoni Setiawan )
T
he main message from the Annual Meetings of the International Monetary Fund and World Bank Group in Bali last week was that multilateralism should be kept to work and the trade war between the United States and China be stopped. Keep the global economy open despite some hurdles by populist movements. There is also a call for the US Federal Reserve to be more considerate regarding the impact of its money tightening policy on emerging markets.
Unfortunately, the US-China trade war will most likely continue and the Fed will raise its interest rate once more in December and three times next year. This means that emerging economies like Indonesia would still be facing a high risk of capital outflow, thereby pressing down the rupiah, and it would be rather difficult to significantly increase exports.
Bank Indonesia (BI) and the Finance Ministry have coordinated well in coping with the financial market volatility and in arresting the rupiah‘s depreciation.
BI has increased its policy rate five times to 5.75 percent and will likely increase the rate again several times later this year and in 2019. BI also has been intervening actively in the foreign exchange market, developed swap and local non delivery forward markets and expanded bilateral currency swap with main trading partners.
