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.
Indonesia must be wary of possible Brexit domino effect: Economist
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!
French President Francois Hollande arrives for a press conference at the Elysee Palace in Paris, on June 24. Hollande said he profoundly regretted the British vote to leave the EU, adding that the union must make changes in order to move forward. (Associated Press/Thibault Camus)
I
ndonesia must be aware of a possible domino effect of the Britain’s exit from the European Union, although Brexit will most likely not have a direct impact on the economy in the near future, Bank Central Asia Economist David Ernest Sumual says.
The Brexit effect will not significantly affect Indonesia and ASEAN trade as export volume to the UK is small at only 0.9 percent and 1.3 percent, respectively, of total trade, he said. However, prolonged political risk could affect the economy.
"The majority of Scotland and Northern Ireland voted to remain in the EU, we need to see if the UK can stand up to separatist issues," David told thejakartapost.com on Friday in Jakarta.
UK Prime Minister David Cameron announced that he would resign immediately after “leave” won the tally. The victory for the "Leave UE" campaign has fanned speculations that more countries could withdraw from the EU amid the fragile recovery of the world economy.
Bank Indonesia (BI) Governor Agus Martowarojo said the central bank would keep an eye on capital flows in the country. As of mid-June, BI recorded Rp 70 trillion of capital inflows into Indonesia, a jump from Rp 30 trillion in the same period last year.
"We believe the world is shocked and we acknowledge there will long-term implications following Brexit […] The impact will be limited to the financial sector," he said underlining that the UK may take two years to complete the procedures required to leave the 28-year-old bloc. (ags)
