Jakarta – Finance Minister Sri Mulyani Indrawati has said Indonesia is to still face a tough external economic challenge in 2020 because of an adverse geopolitical situation that was particularly triggered by a trade war between the United States and China.
She was speaking before House of Representatives' lawmakers in a plenary session on Monday when she submitted the government's macroeconomic indicators and basic fiscal policies for the 2020 state budget.
"It [the trade war] will risk global economic growth and will weaken international trade," Sri Mulyani said as quoted by kontan.co.id.
She said global economic growth will weaken not only because of the US-China trade war, but because of the United Kingdom's unresolved Brexit issue and economic crises in Turkey and Argentina
The minister said the situation was reflected in Indonesia's exports in the first quarter of 2019, which declined by 2.08 percent year-on-year (yoy).
Sri Mulyani said the government's efforts to narrow the current account deficit had also contributed to the economic weakening. She cited a 7.7 percent decline in imports as an issue because Indonesian imports were dominated by raw materials and capital goods needed by manufacturing industries.
"To keep economic growth momentum, the government will focus on investment recovery and boost exports," she said, adding that the government would maintain the growth of consumption through improving purchasing power and price stability and by strengthening consumer confidence.
Sri Mulyani said external factors had provided tough challenges for the Indonesian economy since 2018 because of an increase of the US Federal Reserve fund rate, which was followed by a capital outflow from emerging countries, including Indonesia. (bbn)