BI Predicts Global Growth Is Still Slowing Due To US Resipprocal Tariffs

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

JAKARTA - Bank Indonesia (BI) Governor Perry Warjiyo revealed that the world economy will still grow lower in line with the widespread implementation of the US reciprocal tariff.

Perry explained that various indicators show a slowdown in economic growth in most countries accompanied by disparities in growth between countries.

"In the US, the confidence of economic actors has decreased along with the implementation of tariff policies which have an impact on weakening household consumption and rising unemployment rates," Perry said, Wednesday, September 17.

He added that China's economic performance has also slowed down due to declining exports, especially to the US as a result of US reciprocal rates and weakening domestic demand, especially investment.

Meanwhile, the economies of Europe and Japan are also in a downward trend in line with the depressed export performance. Then India's economy increased slightly, supported by fiscal stimulus to encourage consumption.

"With these developments, Bank Indonesia predicts that world economic growth in 2025 will still have a lower potential than the previous forecast of around 3.0 percent," explained Perry.

He continued, the world's economic prospects that have not yet been strong and the decline in inflationary pressures have prompted some central banks to pursue accommodative monetary policy, except in Japan.

He said the probability of a reduction in the Fed Funds Rate (FFR) was also higher in line with the increase in the US unemployment rate.

In the global financial market, US Treasury yields are declining in line with FFR's declining expectations and pushing for a weakening of the US dollar currency index (DXY).

Dengan masih tingginya ketidakpastian, Perry menyebut aliran modal global ke komoditas emas semakin meningkat sedangkan aliran modal ke emerging market (EM) tertahan.

"Ke depan, volatilitas pasar keuangan global masih terus berlanjut sehingga perlu diantisipasi dengan penguatan berbagai respons dan koordinasi kebijakan untuk menjaga ketahanan ekonomi dalam negeri," tandas Perry.

With the high uncertainty, Perry said that global capital flows to gold commodities are increasing while capital flows to emerging markets (EM) are stuck.

"In the future, the volatility of global financial markets will continue so it needs to be anticipated by strengthening various responses and coordination of policies to maintain domestic economic resilience," said Perry.