Finance Minister Sri Mulyani Indrawati said Thursday that the government would focus on domestic sources of growth and continue strengthening coordination with other financial authorities.

Her comments came on the back of an unexpected Donald Trump victory in the US presidential election. She acknowledged that, based on his previous statements and debates, his upcoming economic policies would affect international trade quite significantly as the US was still the world’s largest economy.

“His views and policies regarding the Trans-Pacific Partnership [TPP] and global trade, as well as relations with China, will affect the world. In terms of US-China trade, this will affect Indonesia as we are more exposed to Asia,” she said in a press conference.

Both the US and China are Indonesia’s top trading partners and among its largest investors as well. Data from the Central Statistics Agency (BPS) shows the US was listed as the country’s largest export destination and its fifth-largest import source.

Apparel and clothing accessories were the top products exported to the US, while machinery was what Indonesia imported the most of from the US.

There is also concern about the future path of global financial markets, as Trump previously indicated he might replace US Federal Reserve chair Janet Yellen. The move, if realized, would likely spell trouble for global markets.

In Indonesia’s case, a market rout would pose a challenge as the country needs to raise financing from global investors to support its 5.1 percent economic growth target next year.

Bank Indonesia (BI) Governor Agus Martowardojo said in the press conference that global markets had previously predicted the Fed would postpone its plan to raise its policy rate one time in December this year, but Trump’s victory and his previous statements on the US economy had reversed the prediction.

“The prediction on the Fed’s plan to raise its rate one time in December was included in our calculation when we cut our seven-day reverse repo rate by 25 basis points in October. The Fed is also predicted to increase its rate twice next year and thrice in 2018,” he said.

As the risks loom, the silver lining may be in the government’s massive infrastructure projects that are expected to bear fruit next year.

Coordinating Economic Minister Darmin Nasution claimed that infrastructure and deregulation would remain key priorities next year, along with other improvements to reduce the dependency of domestic industries on imports.

The infrastructure projects, as they roll out, are expected to have trickle-down effects triggering loan demand and pushing credit growth to between 7 percent and 11 percent in 2017, higher than this year’s prediction of about 7 percent to 9 percent.

Meanwhile, economists suggest the government strengthen domestic purchasing power and continue its taxation reform, including by improving the taxpayer database, to help increase state revenues.

CIMB Niaga chief economist Adrian Panggabean predicted a 5.1 percent growth next year that could only be achieved if the government continued spending efficiently and provided an economic catalyst that would accelerate private investment and trigger state revenues, such as lowering tax rates.

Improving economic growth through infrastructure projects will help fuel positive sentiments among stock market investors as well, said Danareksa analyst Lucky Bayu Purnomo, who projects the Jakarta Composite Index (JCI) would reach the level of 5,700 sometime next year.

Consumer goods and retail sectors are still favored by investors, followed by banking, property and infrastructure. “Stocks in the mining sector are already too expensive and overbought,” Lucky said.

The financial market will also get some boosts from BI’s dovish monetary policy, Daewoo Securities Indonesia research head Taye Shim said, although it will take time for the real sector to feel the effect.

The JCI, the benchmark of the Indonesia Stock Exchange (IDX), gained more than 18 percent of its value so far this year, the most among its peers. It peaked at 5,472 on Oct. 4, but has yet to return to its all-time record high of 5,518 booked on March 31 last year. (win)

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