World Economic Forum: Indonesia Waits for New US Economic Policy
Jakarta. Indonesia maintains an optimistic view of the country's economic prospects, while keeping a close watch on any developments that may arise once the new United States administration unveils its economic policy, a minister said.
The world is anxiously awaiting President Donald Trump's policies and the consequences that might follow.
"I think we can expect, at least for the first six months to one year, that [President Trump] is going to take a protectionist stand," former Indonesian trade minister Mari Elka Pangestu said on the sidelines of the World Economic Forum in Davos, Switzerland, on Friday (20/01).
Mari said Indonesia, along with any other countries that have economic relations with the United States, will be affected by Trump's anti-globalization aspirations, which he expressed during his election campaign.
"[Trump] is going to be more unilateral, maybe not even bilateral, and these actions will affect world markets, trade and investment. [...] We must have some kind of response and position," she said.
Finance Minister Sri Mulyani Indrawati said Indonesia's strong fundamentals will allow it to survive a new global order in which the world's biggest economy becomes more reclusive.
"We remain optimistic but must also be careful regarding global conditions," she said, as quoted by Antaranews.com.
There are several indicators, including Indonesia's strong economic growth, expected to be 5.1 percent this year.
The country's rate of inflation is also expected to stay at a manageable level of 4 percent this year compared to 3.02 percent last year.
Sri said Indonesia must be careful if the United States imposes punitive trade tariffs as it would not only affect its own economy but also the rest of the world.
Indonesia's textile, rubber, electronic components and footwear exports to the United States last year amounted to 11.9 percent of the archipelago's total non-oil exports, or $15.7 billion, up 2.5 percent from 2015.
This compares to total exports worth $28.7 billion to member states of the Association of Southeast Asian Nations (Asean), $14.4 billion to European Union countries and $15 billion to China during the same period.
However, Sri said the US fiscal expansion policy may benefit Indonesia as it will boost demand for goods and services from the United States.
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