Bank Indonesia Projects External Turmoils to Ease in 2019

TEMPO.CO, Jakarta - Bank Indonesia (BI) senior deputy governor Mirza Adityaswara believes that a number of global economic turbulence will subside next year. One of them is the uncertainties stemming from Federal Reserve, regarding their interest rates.

Investors predict that the FED will only raise their interest rates until 2019. “The bottom line is by 2019 the US will stop their interest rate hike,” he said in Jakarta on Monday, September 10.

Mirza said that when that happens pressure from the negative sentiments will subside. Other factors that can stimulate an economic improvement is the easing tradew tension between the US and China, also by 2019. 

Once all external factors have gone he said that Indonesia will be able to curb its current account deficit.

Last year's current account deficit was around US$17 billion. As per this year’s first semester, the CAD was IS$13.5 billion.

Read: Rupiah Gains as BI Hints Another 7DRR Hike 

As for domestic factors affecting the economy, Mirza said that the government has to be able to curb import volume. One way is by postponing infrastructure projects that have not began.

“From what I've read, there are some 15 billion worth of infrastructure projects that have not started. And those would be rescheduled,” he said.

There is also the mandate to use at least 20% of biodiesel mix in fuel. Mirza hopes that the policy can reduce oil import and fix the economy since Indonesia’s oil import balance is also suffering a deficit.

Muhammad Hendartyo