Jakarta: The impact of the ongoing conflict between China and Taiwan on the Indonesian economy will be limited, but the situation must continue to be monitored, head of the Finance Ministry's Fiscal Policy Agency (BKF) has said.
The tensions between China and Taiwan are geopolitical in nature. From an economic standpoint, the conflict poses an exogenous risk, Febrio Kacaribu explained during an online Ask BKF event on Monday.
Thus, the bilateral conflict is outside the scope of Indonesia's economy, and its impact is estimated to come in the form of spillover on the domestic economy.
If the situation escalates, the ministry will analyze the potential impact of the China-Taiwan conflict on trade mobility and investment mobilization first, Kacaribu informed.
"This is because we already saw what happened in Ukraine and we already felt the impact. To this end, we already have to change and prepare our policy in relation to the war in Ukraine," he added.
He said he expects global conflicts, whether in Ukraine or Asia, to de-escalate soon so that global and regional economic growth can be maintained.
Within this context, economic diplomacy will continue to be prioritized despite the fact that geopolitical issue extends beyond economic issues.
Economic diplomacy must be pursued given that Russia and Ukraine's geopolitical conflict has already affected many countries, specifically poor countries in Africa.
In fact, within the G20, Indonesia has already highlighted how many poor countries are experiencing food and malnutrition crises, which has led to humanitarian calls for conflict de-escalation, Kacaribu highlighted.
"We certainly expect a similar phenomenon to occur within the context of this escalating condition in Asia so that we can continue to maintain the condition of the global economy," he said.
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