BI: Global Economic Uncertainty Increases Due To The Increase In US Tariffs

JAKARTA - Bank Indonesia (BI) expressed its uncertainty that the global economy will increase again after the announcement of an increase in the effective tariff for the United States (US) to several developed and developing countries.

BI Governor Perry Warjiyo said the policy of increasing US reciprocal rates which is planned to take effect from August 1, 2025 is predicted to weaken the prospects for world economic growth, especially in developed countries.

"Economic growth in the US, Europe and Japan is in a downward trend amid the expansionary fiscal policy and the easing of monetary policy in the country," he said at a press conference, Wednesday, July 16.

He said that China's economic performance is also predicted to be not yet strong, amid various export diversification strategies and India's economic performance is predicted to remain well supported by domestic demand.

Perry predicts 2025 world economic growth is still at around 3.0 percent and US inflationary pressures are still decreasing, pushing for strong expectations towards the future decline in the Fed Funds Rate (FFR).

Meanwhile, he explained that the shift in capital flows from the US to Europe and developing countries, as well as commodities that are considered safe such as gold, continues in line with the increasing risks of the US economy, including fiscal risks.

According to him, this development has prompted the continued weakening of the US dollar currency index against developed countries (DXY) and developing countries (ADXY).

In the future, he conveyed that stronger policy vigilance and responses and coordination were needed to mitigate the uncertainty of the global economy and financial markets that were still high, as well as maintain external resilience, maintain stability, and encourage economic growth in the country.