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Indonesia not immune to Trump's policy impact, ADB says

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Jakarta Globe - December 13, 2024

Jayanty Nada Shofa, Jakarta – Any economic decision made by the US President-Elect Donald Trump is set to affect Indonesia, according to a top brass at the Asian Development Bank (ADB).

In about five weeks from now, businessman-turned-politician Trump will regain control of the world's largest economies. Ahead of his inauguration, Trump has threatened a trade war against China by promising massive hikes on Chinese goods entering the US market.

ADB's country director for Indonesia, Jiro Tominaga, said Thursday that Jakarta – just like the other Asian economies – would not be immune to the impact of any policy changes under Trump. Tominaga, however, refused to say the extent of its impact, saying that it would only be visible after Trump takes office.

"We are watching closely on the discussions [on Trump].... Any sort of policies and directions that a country like the US takes will always have some influence in countries like Indonesia," Tominaga told reporters in Jakarta on Thursday.

"Yes, [Trump's return] will have an impact [on Indonesia's growth], but what kind of impact will depend on how exactly [Trump's] policies come out," Tomniaga said.

As Trump gears up for his comeback, President Prabowo Subianto is pursuing an 8-percent growth. ADB estimates show that Indonesia is forecast to grow 5 percent in both 2024 and 2025.

ADB's recent report wrote that US policy changes under the upcoming Trump government could affect Asia and the Pacific's long-term growth. But as significant policy changes take time, its effects would likely materialize from 2026. The effects, however, could be sooner if the new policies enter into force earlier than expected.

Indonesia is also already bracing for the likely flood of Chinese imports in case Trump proceeds with the tariff hikes. Deputy Trade Minister Dyah Roro Esti not long ago told reporters that Indonesia hoped to capture the opportunity from the potentially worsening US-China trade tensions. She added, "But we need to make sure that a large part of the US-bound Chinese goods do not come to Indonesia [once Trump's tariffs are in place]."

Government data shows Indonesia-US trade hit nearly $31.6 billion in January-October 2024. Indonesia enjoyed an almost $11.5 billion surplus when trading with the US during that period. On the other hand, Indonesia-China trade totaled approximately $108.9 billion so far this year as of October. Indonesia's trade deficit with China amounted to about $8.8 billion.

Source: https://jakartaglobe.id/business/indonesia-not-immune-to-trumps-policy-impact-adb-say

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