Watch Out for US Economic Slowdown
31 July 2014 15:54 WIB
TEMPO.CO, Jakarta - The government and Bank Indonesia (BI) are asked to be aware of a potential recession in the United States due to its slowing economy after the International Monetary Fund (IMF) corrected the US growth rate from 2 percent to 1.7 percent. A US recession will definitely have an impact to the national economy, affecting the exchange rates in a number of emerging markets including Indonesia.
"As Indonesia's main trading partner, the US's slowing growth will have an impact on the exports and imports performances between the two countries," Enny Sri Hartati, executive director of the Institute for Development of Economics and Finance (Indef), said last weekend.
Meanwhile, Bank Central Asia chief economist David Sumual said that how a US economic slowdown impacts Indonesia is inseparable from the US' close ties with China. The Americans have been importing high quantities of finished goods from China, while the latter imports raw materials from Indonesia. Ergo, a US recession will lower the demand for products imported from China.
David suggested that the government to diversify local products and export destinations. The domestic economic potential also needs boosting to prevent it from being too prone to global sentiments.
Responding to the analyses, Investment Coordinating Board (BKPM) chief Mahendra Siregar said he was not worried, as he personally unsure of IMF's projection of the US economy.
"This is already the eight time [IMP] corrected the US' economic growth," he said, some time ago.
He said that it's OK for Indonesia to keep notes on IMF's forecasts. However, it should not lead to the expense of domestic competitiveness. With an economic growth model that has great potential in domestic investments, Indonesia has a reason not to always believe in IMF. "We must have our own scenario," said Mahendra.
AYU WANDARI | TRI ARTINING PUTRI | PINGIT ARIA
