Jakarta – Finance Minister Sri Mulyani Indrawati says that Indonesia will face difficulty in maintaining gross domestic product (GDP) growth at 5 percent this year because of the ongoing trade war between the United States and China.
"This situation will not be short term because of head-to-head confrontation [between China and the US], making it difficult to resolve the two giant countries' diplomatic differences," said Sri Mulyani in Jakarta on Wednesday as quoted by kontan.co.id.
The trade war will greatly affect the Indonesian economy because it will trigger a global economic slowdown, high inflation and a global trade slowdown, she said, adding that under such circumstances, Indonesia could not rely on exports.
"The condition of the global economy is not ideal, while Indonesia is trying to maintain economic growth at higher than 5 percent," Sri Mulyani added.
She said Indonesia could rely on domestic resources to support the manufacturing industry, but with limited resources, the manufacturing industry would also be affected.
The minister stressed the importance of Indonesia staying attuned to the slowdown in the importation of raw materials and capital goods because it was closely related to slow growth in the manufacturing industry.
Statistics Indonesia data revealed on Wednesday a 6.28 percent year-on year (yoy) decline in raw material imports and 8.68 percent yoy decline in capital goods imports in April.
Indonesia has set a target of 5.3 percent in GDP growth this year. (bbn)