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BI’s top man shrugs off geopolitical risks, citing strong capital inflows
Although share prices in Asian markets declined following the killing of a top Iranian general, the flow of foreign investment into Indonesia’s debt and equity markets remains high, according to the governor of Bank Indonesia.
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Bank Indonesia Governor Perry Warjiyo speaks at a press interview at the central bank's Baitul Ihsan mosque building in Central Jakarta on Friday, Jan. 10. (JP/mfp)
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eightened geopolitical risks as a result of trade conflicts among major countries and tensions between the United States and China will not affect the flow of foreign funds into Indonesia, Bank Indonesia’s top official has said.
The governor of the central bank, Perry Warjiyo, said geopolitical risks would have little impact on the Indonesian economy, especially the flow of investments, even though global stocks had been under selling pressure following the recent killing of an Iranian general.
He said although share prices in Asian markets declined following the incident, the flow of foreign investment into Indonesia’s debt and equity markets remained high.
The year 2020 is projected to be marked by a series of events that could disrupt world balance. The trade war between the US and China may fragment the global economy; an erosion of alliances and global leadership may lead to increased geopolitical tensions; and climate change might constrain economic growth.
“We do not see geopolitical risks as having a significant impact on our macroeconomy, external stability and the rupiah exchange rate,” Perry told reporters in Jakarta on Friday.
He added that the economic risks from global events, such as the military tension between the US and Iran after the killing of the latter’s high-ranking military general Qasem Soleimani and the United Kingdom’s vote to leave the European Union, which saw an extended deadline for trade-deal resolution, would not be long-term.
Perry instead saw positive developments on the global side, mainly due to an impending trade deal between the US and China after more than 18 months of trade dispute that affected the economies of many countries.
