USA–China trade war: Economic impact on Indonesia

Abstract

The trade war between the US and China is one of the big problems that have a propagating effect on other countries. Even though the tension is currently on the decline, the impact on the slowdown in the global economy is expected to continue until 2020. The effect of falling commodity prices that underpin Indonesia's economy is that the Indonesian economy only grows at around 5%. The World Bank estimates that the global slowdown will suppress Indonesia's economic growth next year until 2020. Pressures on the stability of the Rupiah exchange rate continued to occur, especially at the beginning of 2019 and the end of the first semester of 2019. In the second quarter of 2019, fluctuations and depreciation pressures on the Rupiah were recorded quite high. During 2019 Indonesia's trade performance slowed compared to the previous year. Contractions occur in both oil and gas and non‐oil and gas commodities. The weak performance of Indonesia's trade balance is influenced by several factors, including falling demand from Indonesia's central export trading partner countries and also contracting commodity prices on global markets. Another impact of the US–China trade war is the pressure of the Indonesian economy and the decline in primary commodity prices affect investment and import performance. This growth is still relatively good, although slowing compared to the previous quarter.