If Trump Wins The US Presidential Election, This Is A Risk That Will Be Faced By The Indonesian Economy

JAKARTA - The Indonesian economy is predicted to be hit by various risks if US Republican Presidential Candidate Donald Trump wins the 2024 US General Election (Pemilu) constation.

According to Bank Mandiri Chief Economist Andry Asmoro, Donald Trump's policy direction, which focuses on 'American First Policy', will again tighten trade policies and extend trade war with China. This is feared to suppress the global economy and have an impact on Indonesia.

"First, protectionism, there is probability that will be done again, then the trade war which is getting tougher compared to the Joe Biden period," Andy quoted Antara as saying.

In addition to the trade war, Andry also highlighted the potential slowdown in energy transition policies under Trump's leadership.

According to him, policies related to climate change will get less support, which could slow down efforts to transition global energy.

This is a big concern for Indonesia, which is actively accelerating the energy transition with international assistance.

"This is also what is now being questioned by energy transition activists, whether it will then slow down or with the same pace. Most likely if chosen the pace will be relatively slower," he said.

Another risk that is likely experienced by the country is the decline in direct foreign investment (FDI) from the US. This was reflected when the administration of Donald Trump (2017-2020), the US FDI that entered Indonesia fell by almost 50 percent.

Furthermore, Andry highlighted the risk of a tougher trade war between the US and China, Indonesia's two largest trading partners, which will have a direct impact on the Indonesian economy.

As is known, the US and China have become Indonesia's main export destinations where each contributed 22.8 percent and 9.8 percent of total exports in 2024. He assessed that the decline in demand from the two countries would hit Indonesia's exports.

Based on its calculations, every 1 percent drop in China's Gross Domestic Product (GDP) will cause a 0.37 percent decline in Indonesia's GDP, while a 1 percent drop in US GDP will reduce Indonesia's GDP by 0.33 percent.

In addition, the trade war is also predicted to reduce the price of palm oil (CPO) as one of Indonesia's main export commodities. The excess supply of soybeans from the US, which is a substitute for CPO, is feared to disrupt global market prices.

"Then (policy) more support on the wealth, yes. This is the word extension of the budget deficit that affects the US inflation rate, so when (Donald Trump) is elected, many ask then whether the pace of the rate cut (interest rate) will then be as fast as previously thought, of course these are risks that we need mitigation," he explained.

Meanwhile, based on a Financial Times and Ross School of Business survey from the University of Michigan released on Sunday (15/9), the Vice President of the United States as well as a presidential candidate from the Democratic Party Kamala Harris, ahead of his Republican rival, Donald Trump, in terms of economic management.

The survey came to the conclusion that 44 percent of respondents trusted Harris more in dealing with the economy, while 42 percent supported Trump.