JAKARTA - Bank Indonesia (BI) believes that the ongoing US-China trade war significantly affects the pressure on the global trade volume and global economic growth.
“The US economy is predicted to slow down due to declining exports as a result of tensions in trade relations, limited fiscal stimulus, and the confidence of economic actors that has remained low,” said BI Governor Perry Warjiyo at a press conference at the BI headquarters after this month's BI Board of Governors' Meeting, Thursday (18/7).
In addition, Mr Warjiyo added, economic growth in Europe is also expected to slow down due to falling exports and structural problems associated with the region’s aging population. Eventually, both of these factors affect weakening domestic demand.
Similar situations are also taking place in other countries such as China and India, where commodity prices are going down due to the weakening global economy. In response, central banks in many countries, both developed and emerging, are adopting dovish monetary policies, including the US Federal Reserve which will likely slash the Federal Fund Rate (FFR) for the first time since 2008.
“The policy response has reduced the uncertainty of global financial markets and pushed foreign capital inflows into developing countries,” concluded Mr Warjiyo. (MS)