The Jakarta Post
While stability is expected in the global financial market thanks to less aggressive monetary policy from the United States Federal Reserve, Bank Indonesia (BI) Governor Perry Warjiyo has warned the government about continued global uncertainty, coming, in particular, from economic slowdowns in the US and China.
Slower economic growth in both countries – major destinations for Indonesian exports – would affect Indonesia’s trade performance if the government failed to find new export destinations, Perry said in Jakarta on Monday.
Perry said the Fed would likely increase its key rate just once this year, while several economists have predicted that the US central bank would not do so at all this year because of the economic slowdown.
In 2018, the US economy grew by 2.9 percent. BI projects that the US economy will grow by 2.3 percent this year and 2 percent in 2020.
Meanwhile, China has revised its growth target down to between 6 and 6.5 percent this year from its initial target of 6.5 percent. In 2018, China’s economy grew by 6.6 percent.
In light of this, Perry said the government should focus on expanding exports to non-traditional markets such as India and Bangladesh as well as to African countries in anticipation of declining imports from the US and China.
Meanwhile, the US’ protectionist policy, particularly its imposition of tariffs on imports from China, is seen as the cause of the economic slowdown in China. “China is experiencing deleveraging,” said Perry, as reported by kontan.co.id, adding that China’s economy was predicted to grow by 6.3 percent this year.
Meanwhile, the US economy has experienced slowed growth this year because, among other factors, the benefits of Trump’s stimulus policy were curtailed by the government shutdown earlier this year. (bbn)