Sri Mulyani Says Donald Trump's Victory Will Affect World Oil Prices

Minister of Finance Sri Mulyani (Photo; Doc. Antara)

JAKARTA - Finance Minister Sri Mulyani Indrawati stated that Donald Trump's victory in the 2024 United States (US) presidential election has the potential to have a significant impact on world oil prices.

This is because Trump's energy policy direction from the Republican Party, which is different from Democratic President Joe Biden, can change global trends related to the issue of climate change and energy.

One thing that is very different is that President Trump, in terms of the issue of climate change, is very different from Biden from the Democratic Party, where Trump, for the decline in CO2, especially from energy (fossil), different or non-following as Biden did. This will certainly have an impact on world oil as well as on future trends on issues related to climate change and energy," Sri Mulyani said quoting Antara.

Sri Mulyani explained that policies under Trump's administration in the previous period tended to less support the reduction of carbon emissions in the energy sector, which is an important concern in the issue of climate change. Previously, Trump himself proposed increasing domestic oil production to reduce international oil prices.

In addition to the influence on oil prices, Sri Mulyani also revealed that Trump's victory would bring changes to other policies that could cause a quick reaction from the market.

These changes include expectations of lower corporate taxes, increased government spending, and stricter import tariff policies, especially against China. The increasingly high trade tension with China could prolong the era of uncertainty in the global market.

Another risk that could arise after Trump's victory was global manufacturing contractions, and fiscal pressure in many countries.

Furthermore, the State Treasurer also explained that the current US economy still shows strong resilience with growth of 2.7 percent (yoy) in the third quarter of 2024.

The unemployment rate was recorded at the level of 4.1 percent, and inflation decreased to the level of 2.4 percent.

"This inflation is due to a slight increase in food prices which caused the Fed to implement a policy to cut the Fed Fund Rate 25 bps interest rate two days ago," he explained.

Meanwhile, the increase in yields of US bonds or US Treasury 10 years reached 4.4 percent, driven by the expansionary expectations of the US government's budget so that the US dollar continues to strengthen.

According to him, this strengthening not only affects the US domestic economy, but also the global economy considering the magnitude of the US's role in the world economy and dollar dominance in international transactions.

"This all happens in the US, but because the US is the largest country in the world, in terms of economic size and use of the US dollar where more than 50 percent is used in world transactions, it certainly affects the global economy," he added.