Indonesia’s Economic Outlook
JAKARTA (Reuters) – Indonesia’s economic growth this year will likely stay around 5% despite trade tensions, its finance minister said on Thursday.
The minister stressed that a government delegation was still negotiating terms with Washington to try to avoid reciprocal tariffs. The outlook is roughly the same growth pace as last year’s 5.03%. The government’s target is 5.2% this year, with President Prabowo Subianto pledging to lift growth to 8% by 2029.
Sri Mulyani Indrawati made these remarks at an online press conference of Indonesia’s stability board, which includes the finance minister, central bank governor, head of the financial services authority, and head of the deposit insurance corporation.
The minister and Bank Indonesia Governor Perry Warjiyo were in Washington to attend IMF-World Bank meetings. A delegation led by chief economic minister Airlangga Hartarto was also in the U.S. capital trying to conclude trade talks within 60 days since its April 17 meetings with U.S. trade officials.
In those meetings, Indonesia offered to buy more American products and cut its own non-tariff barriers to avoid a 32% tariff on its exports.
>The government will actively conduct early mitigation, including communicating with the U.S. government and will continue deregulation efforts to reduce trade barriers,” Sri Mulyani stated.
> “Efforts will also continue to protect domestic demand,” she added.
Indonesia’s financial markets have faced capital outflows since the U.S. announcement of reciprocal tariffs in early April. Sri Mulyani indicated that the rupiah’s movements against the U.S. dollar are expected to remain stable.
Indonesia’s exports to the United States account for just about 2% of its gross domestic product, but the impacts from the trade war could harm the economy more.
Key exports to the U.S. include electronics, apparel, and footwear.
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