Examining The Potential Economic Impact Of Trump's Impeachment

President of the United States, Donald Trump. (Photo: Twitter @realDonaldTrump)

JAKARTA - The impeachment of the President of the United States, Donald Trump, immediately had an impact on the weakening of the Jakarta Composite Index (IHSG), which fell 0.59 percent to 6,249.93 today. The correction of JCI today broke the series of JCI which was always closed green for four days in a row.

Economist at the Institute for Development of Economics and Finance (INDEF) Bhima Yudhistira said the instant impact of Trump's impeachment was that the flow of foreign funds today came out of IDR261 billion in the form of net sales of shares.

"Investors tend to mitigate risk by diverting to safe assets, namely gold. Business actors are now waiting for the continuation of the Senate decision which will make the final decision. It is feared that the impact on Indonesia will affect investment decisions from the US. Even though we are in need of US investment funds to enter Indonesia, "said Bhima to VOI, Thursday, December 19.

Investors are closely monitoring political conditions in Washington, where the US House of Representatives (DPR) led by the Democratic Party voted to impeach President Donald Trump for allegedly abusing power and obstructing a Congressional inquiry.

The Democrats' two impeachment clauses reportedly won the majority of the votes in the US House of Representatives and will be submitted to the Senate next month to decide whether to remove Trump from office.

Market reaction to the House vote, however, has been limited so far as the Republican-controlled US Senate is widely anticipated not to vote to remove Trump from office.

Minister of Finance (Menkeu) Sri Mulyani Indrawati said Indonesia must be aware of the impeachment of US President Donald Trump by the US House of Representatives which has the potential to have an impact on the country's economy.

"This has resulted in weakening confidence from economic actors, thus affecting the health of the US economy. We need to be aware of this dynamic, "he said.

Sri Mulyani said that impeachment is a political dynamic that will affect the economic sector so that it also has an effect on other countries including Indonesia.

"As the largest economy in the world, this certainly has an influence in terms of US economic confidence in the future whether this situation will continue until the 2020 elections," he said.

On the other hand, the Minister of Finance emphasized that Indonesia must still respect the impeachment decision against Trump because it is a dynamic and political process of a country.

"For us, from a political perspective, it is the dynamics and processes of the state, so we respect it. But we are still on the lookout for the influence that will seep into the Indonesian economy, "he stressed.

Governor of Bank Indonesia Perry Warjiyo said that the influence of the impeachment of President of the United States of America Donald Trump by the US House of Representatives was minimal. This is reflected in the strengthening of the rupiah exchange rate.

"The effect on Indonesia is minimal, as in the exchange rate we do not see a significant effect. The rupiah is still moving below the level of Rp. 14 thousand, or to be precise between Rp. 13,980-13,990 per US dollar," he explained.

Throughout this month until November 18, the rupiah has strengthened 0.93 percent. Meanwhile, during this year, the rupiah has strengthened by 2.9 percent. Even so, he explained that what happens to US politics will certainly affect global financial market conditions. "Especially in the short term," he said.

However, according to Perry, the global influence on a country also depends on the country's economic conditions. The Indonesian economy itself, he continued, is currently still quite good.

Perry said that Indonesia's economic growth was maintained, supported by household consumption, fiscal expansion and improved exports. Recent developments show that consumer confidence increases along with the seasonal pattern towards the end of the year so as to sustain healthy household consumption.