TEMPO.CO, Jakarta - Finance Minister Sri Mulyani Indrawati responded to the World Bank policy, which revised its projection on the world's economy. Minister Sri said that the revision, which presents lower growth, was due to the ongoing trade war between the United States and China.
"These institutions apparently noticed the escalation of the trade war, the US and China has been included in a bad scenario. The downside risk is happening, [the projection] sets an entirely different tone," Sri Mulyani said to the media on Wednesday, June 5, 2019.
Previously, the World Bank lowered its projection of the world’s economic growth from 2.9 percent to 2.6 percent. This can be seen in its recent report titled Global Economic Prospects: Heightened Tensions, Subdued Investments, which was released on June 2019.
Sri asserted that a number of world economic institutions such as the World Bank, the International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD), and the Asia Development Bank (ADB) had not predicted the trade war to reach its current level. Both countries had previously agreed to hold a negotiation to alleviate tension.
Sri, who is also a former Acting Director of the World Bank, added that the economic growth correction effect of the trade war will threaten Indonesia's domestic economic growth in the 3rd and 4th quarter of 2019. Moreover, the United States has implemented an increase in tariffs as part of the trade war.
"Therefore, the 3rd and 4th quarter will be affected by not a threat, but the implementation of the threat," Sri Mulyani said.
Sri further explained that the effect of global economic slowdown against Indonesia's economy has become apparent. One of the effects is the slowing down of exports to our main destination countries such as China and the United States.