JAKARTA,. Rising trade tensions between the United States and China will negatively affect the economic growth of other countries, Indonesia’s central bank governor said today.
Other than the effect through the global supply chain, Governor Perry Warjiyo said Indonesia and other emerging markets would be hit by investor risk aversion due to the trade war.
Asked how Indonesian policymakers would respond, he said: “Our strategy is to strengthen domestic demand, control the current account deficit and attract capital inflows.”
Bank Indonesia has raised its benchmark rate by 100 basis points so far this year to defend the falling rupiah currency. The government also recently announced a plan to review capital goods imports to control the current account deficit.