Jakarta: Bank Indonesia (BI) senior deputy governor Mirza Adityasawara has predicted that Indonesian exports will slow this year.
"The Chinese economy slumped in 2013-2013. Its economy only grew 6.4 percent-6.5 percent last year," the BI official told journalists on March 27, 2019.
Based on reports from a number of international economic agencies, China's economy is expected to grow 6.4 percent this year. According toBI, China's economy is stagnant due to postponed fiscal stimuli and the simmering trade tensions with the United States.
"China's economic slowdown will significantly impact Indonesian exports. Our exports will also be hindered by decreasing commodity prices," he noted.
Amid rising global economic uncertainty, Indonesia recorded a trade deficit of US$8.57 billion in 2018. It was the highest ever recorded by the agency.
"If China records an economic growth of 6.3 percent-6.4 percent this year, it will be still within our calculation. If it posts an economic growth of six percent or lower this year, we will need a new calculation," he remarked.
According to the Central Statistics Agency (BPS), the country's exports reached US$180.06 billion in 2018. The number increased by 6.65 percent compared to 2017.
In the meantime, the country's non-oil and gas exports reached US$162.65 billion last year. The number increased by 6.25 percent compared to the previous year.
BI decided to maintain its 7-Day Reverse Repo Rate at 6.00 percent this month. The central bank also maintained the Deposit Facility and Lending Facility rates at 5.25 percent and 6.75 percent respectively.
In order to stimulate domestic demand, BI is committed to implement a number of accommodative policies such as increasing available liquidity by regular and scheduled term-repo transactions in addition to FX Swaps, raising the Macroprudential Intermediation Ratio from 82-92 percent to 84-94 percent in order to bolster bank financing extended to the corporate sector, accelerating financial market deepening policy, as well as strengthening payment system policy to support economic activities and financial inclusion.
In addition to that, BI will continue to strengthen coordination with the Government and other relevant authorities in order to maintain economic stability, particularly in terms of controlling inflation and current account deficit, while sustaining future economic growth momentum by catalysing domestic demand and maintaining external stability to stimulate exports, tourism and foreign capital investment.