Global Financial Market Uncertainty Continues, BI Boss Reveals Investors Move Portfolio To US

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

JAKARTA - Bank Indonesia (BI) revealed that the divergence of world economic growth was widening and the uncertainty of global financial markets continued.

BI Governor Perry Warjiyo said the United States (US) economy grew stronger than forecasts supported by fiscal stimulus that increased domestic demand and increased investment in technology that boosted productivity.

According to Perry, on the contrary, the economies of Europe, China, and Japan are still weakly influenced by the decline in consumer confidence and the delay in productivity, while the Indian economy is still being held back due to the limited manufacturing sector.

"In line with that, the prospect of world economic growth in 2025 is predicted to be higher than the previous projection to be 3.2 percent," he said at a press conference, Wednesday, January 15.

On the other hand, Perry conveyed that the policy direction of the US government and central bank had an effect on the uncertainty of the global financial market.

According to Perry, the strong US economy and the impact of tariff policies are holding back the disinflation process in the US and have an impact on the strengthening of expectations of a more limited Fed Funds Rate (FFR) decline.

"US more expansive fiscal policy has pushed US Treasury yields to remain high, both in the short-term and long-term tenors," he said.

Perry said, along with the increasing geopolitical tensions, these developments led to the growing preference of global investors to move their portfolios to the US.

"The index of the US dollar currency is rising higher, increasing the pressure of weakening various currencies in the world," he said.

According to him, these various global developments require strengthening the policy response in mitigating the impact of global propagation to maintain stability and encourage economic growth in the country.