JAKARTA - Bank Indonesia (BI) stated that the global economic outlook is slowing down with high financial market uncertainty.
BI Governor Perry Warjiyo said that the world's economic growth in 2026 is expected to slow to 3.2 percent from 3.3 percent in 2025 and accompanied by divergent growth between countries.
He added that the prospect of slowing global economic growth was mainly influenced by the impact of reciprocal tariffs of the United States (US) and continued geopolitical tensions, except for the US, which is expected to increase due to the size of fiscal stimulus and high investment, including investment related to artificial intelligence (AI).
"The European and Japanese economies are expected to slow down due to the decline in export performance in line with the global economic slowdown and the still weak domestic demand amid the influence of increasing AI investment," Perry said at a press conference, Thursday, February 19.
Meanwhile, he said China's economy remained in a slowing trend due to weak household consumption, while India's economy was also not strong with declining domestic demand and the performance of the external sector.
According to him, from the global financial market, the Fed Funds Rate (FFR) reduction space remains open as the labor market is still weak. UST yields, especially long-term ones, remain high in line with the increase in US fiscal risks.
Perry said this development encouraged the flow of capital to developing countries to occur selectively, especially to short-term stocks and bonds.
"The US dollar index against developed country currencies (DXY) weakened amid rising demand for safe haven assets which boosted gold prices," he explained.
Looking ahead, he said, global economic uncertainty is expected to remain high, requiring vigilance and strengthening policy responses to maintain the resilience of the domestic economy from global shocks and encourage higher growth.
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