1 week ago
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November 7, 2024 | 03:07 pm
TEMPO.CO, Jakarta - The re-election of Donald Trump as President of the United States has raised concerns about the potential negative impact on Indonesia, particularly in the realm of international trade.
Putu Rusta Adijaya, an Economic Researcher at the Indonesian Institute Center for Public Policy Research (TII), highlighted that Trump's "America First" policy could exacerbate international trade protectionism, which would adversely affect Indonesia.
“Amid global economic uncertainty, coupled with Trump's 'America First' policy, international trade protectionism is likely to escalate, consequently impacting Indonesia negatively. The first impact will be a potential decline in Indonesia's net exports, as Trump is expected to impose import tariffs of 10-20% on goods entering the U.S.,” he said in Jakarta on Thursday, November 7, 2024, as reported by Antara.
This reduction in net exports could hinder Indonesia's future economic growth. Despite the third quarter of 2024 recording a year-on-year economic growth of 4.95%, it still falls short of the average 5% growth rate achieved in recent years.
A second potential impact is capital outflow, as Trump has pledged significant incentives, such as tax cuts and deregulation, to entice American multinationals and foreign investors to prioritize domestic production and service delivery within the U.S.
“These incentives and favorable domestic economic conditions in the U.S. could make it more attractive for investors compared to developing countries like Indonesia, leading to capital outflow. This, in turn, could result in the depreciation of the Rupiah exchange rate, burdening Indonesian companies with dollar-denominated debts. In the long term, this could lead to reduced company efficiency and potential layoffs,” Putu explained.
He further warned that Trump's protectionist policies could trigger similar actions from other countries, further deviating from the principles of free trade.
“Protectionist policies are already happening and likely to intensify due to Trump's influence. This trend is becoming increasingly widespread,” he added.
Developed countries currently dominate the implementation of protectionist policies globally. If Indonesia's trading partners follow suit in response to Donald Trump's policies, the country could face even greater economic challenges.
ANTARA | REUTERS
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