Bank Indonesia Reveals Global Economy Uncertainty Begins To Ease

Governor of Bank Indonesia (BI) Perry Warjiyo. (Photo: Doc. Antara)

JAKARTA - Bank Indonesia (BI) said the uncertainty of the global economy eased slightly with the provisional agreement between the United States (US) and China to reduce import rates for 90 days.

Bank Indonesia Governor Perry Warjiyo said this development had a better impact on the world's economic prospects when compared to the April 2025 projection from the previous 2.9 percent to 3.0 percent.

"Economic growth in the US and China is forecasted to be better than the April 2025 projection, which then has a positive impact on various other countries including Europe, Japan and India," Perry said at a press conference, Wednesday, May 21.

He said that the reduction in tariffs is also predicted to reduce the projection of US inflation, thus encouraging the continued strong expectations of the Fed Funds Rate (FFR) decline.

Meanwhile, Perry said the US Treasury yield was higher than the forecast in line with the increasing risk of US fiscal sustainability.

Perry said that in the global financial market, the shift in capital flows from the US to countries and assets deemed safe (safe haven assets) continued and began to be followed by an increase in capital flow to emerging markets (EM).

According to him, due to this, the US dollar currency index against developed countries (DXY) continues to weaken and is also followed by a weakening of the developing country's currency in Asia (ADXY).

However, he conveyed that in the future the development of import tariff negotiations between the US and China and other countries will still be dynamic so that global economic uncertainty remains high.

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