JAKARTA - Bank Indonesia (BI) said that global uncertainty was still high due to the reciprocal tariff policy implemented by the President of the United States (US) Donald Trump.
Head of the BI's Department of Economic Policy and Monetary, Firman Mochtar, explained that his party continues to carry out regular calculations of the development of tariff policies, especially those imposed by the United States.
According to him, the high global uncertainty makes world economic stability difficult to predict, this is exacerbated by frequent policy changes in a short time, including the increasing geopolitical tension between Iran and Israel, although it is now starting to subside.
"We did a lot of calculations from month to month about Trump's rates that happened, so this is our concern after we see previously that there is tension related to geopoliticals between Iran and Israel, then easing, blasphemies, and then continuing later related to Trump," he said in a Media Taklimat entitled 'Keeping Stability, Encouraging Economic Growth', Thursday, July 24.
On the other hand, he highlighted that global uncertainty is still very high and based on BI projections, global economic growth in 2025 is estimated to only reach 3.0 percent lower than in 2024 of 3.3 percent.
He added that several major Indonesian trading partner countries, such as the United States, China, and the European region, are also expected to experience an economic slowdown.
"What is of concern in the midst of an uncertain global economy, the world's economic growth is still relatively slow, we see that inflation is still decreasing, although the impact of this tariff continues to be our concern because this will increase the cost of the goods itself," he said.
According to him, with high uncertainty, the yield of 10-year tenor US bonds remains high, this reflects the high perception of fiscal risk in the US, and triggers a shift in capital flow from the US to Europe and emerging market countries, including Indonesia.
"From the United States itself, this USD yield has indeed decreased, but what is of concern is how the composition is between 2 and 10 years. The 10 years are still high at around 4 percent," he said.
Firman considered that cutting this tariff gave hope for an increase in national exports to the US.
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"From 32 percent to 19 percent, at least the export rate is better. Until we hope that our exports will increase on the one hand," he said.
However, he said that BI continues to calculate the impact of the policy on the exchange rate and national economic growth.
Firman added that for the domestic economy, BI estimates that Indonesia's economic growth in 2025 will be in the range of 4.6 percent to 5.4 percent, slightly lower than the previous projection of 4.7 percent to 5.5 percent.
"We need to encourage various sectors, various components of GDP. The relaxation of policies taken by BI from monetary and macroprudential policies is expected to encourage economic growth," he added.
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