Kuala Lumpur – Planned United States tariffs could reduce Indonesia's potential growth by 0.3 to 0.5 percentage points, but a 90-day pause in implementing the levies allows time to discuss solutions, Indonesia's finance minister told Reuters on Thursday (Apr 10).

Minister Sri Mulyani Indrawati said Indonesia welcomes the 90-day pause as it provided an opportunity to mitigate or avoid the downside risks from tariffs to economic growth.

"The estimated current situation, before the pause, could reduce our potential growth by between 0.3 per cent of GDP up to 0.5 per cent," she said in an interview on the sidelines of the ASEAN finance ministers and central bank governors meeting in Malaysia.

Indonesia has set a 5.2 per cent GDP growth target this year versus 5.03 per cent achieved last year. President Prabowo Subianto, however, wants to jack up the growth to 8 per cent by 2029.

Indonesia's authorities have said the US tariffs would have a limited impact on the economy, which relies more on the domestic market.

The US was Indonesia's third-biggest export destination as of last year, receiving shipments worth US$26.3 billion, according to Indonesian government data.

Sri Mulyani said Indonesia would use the 90-day tariff pause to come up with a framework of cooperation that was "mutually respected" by other countries.

"We have to continue to be very prudent... Expenditure should be made more efficient, well-targeted and effective in supporting growth on the monetary side."

She said the recent pressure on the rupiah currency, which is at all-time lows, was temporary, adding the government remained focused on indicators such as corporate debt and government debt-to-GDP.

The rupiah strengthened as much as 0.83 per cent to 16,720 rupiah per US$1 on Thursday as of 5.12am GMT, according to LSEG data, after hitting an all-time low for two days straight since the market reopened on Tuesday.

Source: https://www.channelnewsasia.com/asia/indonesia-us-trump-tariffs-reduce-potential-growth-505679