Global Economic Uncertainty Is Still High, BI Reminds The Need For Vigilance

JAKARTA - Bank Indonesia (BI) expressed that the uncertainty of the global economy has eased slightly, although it remains high due to the dynamics of negotiations on the resipprocal rate of the United States (US) and geopolitical tensions in the Middle East.

BI Governor Perry Warjiyo said various indicators show that US tariff policies have an impact on slowing down the world economy.

"Economic growth in developed countries, namely the US, Europe, and Japan, is in a downward trend amid the expansionary fiscal policy and the easing of monetary policy in the country," Perry said at a press conference, Wednesday, June 18.

He added that China's economy has slowed down due to declining exports, especially to the US amid a slowdown in its domestic demand, while India's economy is forecasted to grow well, mainly driven by strong investment.

According to him, with these developments, the prospect of world economic growth in 2025 remains at 3.0 percent.

Meanwhile, he said that the pressure on US inflation was decreasing in line with the slowing economy, despite rising inflation in goods groups due to tariff policies, thereby strengthening expectations towards the future decline in the Fed Funds Rate (FFR).

According to him in the global financial market, shifting capital flows from the US to assets deemed safe and also to emerging market financial assets continues to occur.

Perry said that this development was pushing for the continued weakening of the US dollar currency index against developed countries (DXY) and developing countries (ADXY).

He assessed that in the future global economic uncertainty is predicted to remain high due to the ongoing tariff negotiations between the US and a number of countries, as well as the escalation of geopolitical tensions in the Middle East.

"This condition requires vigilance and strengthening responses and coordination of policies to maintain external resilience, maintain stability, and encourage economic growth in the country," he said.