Indef: US, China Trade War May Spark Layoff in Several Industries

TEMPO.CO, Jakarta - An economist from the Institute for Development of Economics and Finance (Indef) Bhima Yudhistira Adhinegara viewed the trade war between the United States and China poses a negative sentiment for Asian countries including Indonesia.

“The uncertainty of the US-China trade war will be a negative sentiment, especially for Asian countries. This will not only affect exports but also potentially create the loss of jobs through layoffs in the sector of raw material producers up to intermediary goods,” said Bhima on Thursday, June 21.

He further said that the situation will affect the interests of investors that plan to invest in developing countries. The industries that would likely be affected according to Bhima are palm oil, processed wood, rubber, paper producer, iron ore, oleochemical, petrochemical.

Read: Rupiah May Weaken over US-China Trade War

The investors, according to Bhima, are currently closely studying domestic economic data, especially the dot plot Fed rate shift from 2.25 percent to 2.5 percent in the latest Federal Open Market Committee (FOMC) meeting.

He also suggested that there might be four Fed rate escalations based on the response of the market that has been going since the US Dollar index crossed the level 95.1, the highest in the past 11 months.

“The 10-year yield treasury has also touched 2.93 percent that has caused the yield spread with a 10-year SBN (government securities) can potentially widen,” said Bhima.

Previous reports state that the Coordinating Minister of Economic Affairs Darmin Nasution said that Indonesia is not able to do much about the US-China trade war, which he said as an unpleasant situation. It is also the reason Minister Darmin said that Indonesia is still busy minding its own domestic problems.

MUHAMMAD HENDARTYO