Various Government Policies Able to Control the Impact of Global Economic Weakening
Jakarta – Amidst increasing pressure from the global economic slowdown, the economic policies taken by President Prabowo have succeeded in holding back the negative impact on the national economy. Several parties have stated that the government’s strategic steps in maintaining domestic economic stability are considered right on target and have a real impact on the ground.
Related to this, the Financial System Stability Committee (KSSK) reported that financial system stability remained stable in the first quarter of 2025 amid increasing uncertainty in the global economy and financial markets.
The Minister of Finance and Chair of the KSSK, Sri Mulyani Indrawati, said that global economic uncertainty was caused by the dynamics of the implementation of the retaliatory tariff policy (reciprocal) from the United States (US) government which gave rise to an escalation of the trade war.
The KSSK, which consists of the Ministry of Finance, Bank Indonesia (BI), the Deposit Insurance Corporation (LPS), and the Financial Services Authority (OJK), continues to improve coordination in implementing a number of policies to anticipate the spillover impact of global economic pressure on the domestic economy.
“KSSK agreed to continue to increase vigilance and strengthen coordination and policies from KSSK member institutions in an effort to mitigate the potential impact of global risk factor spillovers, while increasing efforts to strengthen the domestic economy and financial sector,” said Sri Mulyani.
Sri Mulyani said that the implementation of reciprocal tariffs caused a tariff war and was expected to have a negative impact on world economic growth, the US and Chinese economies. This condition caused an increase in uncertainty in the global financial market and uncertainty in the governance of trade and investment between countries.
This condition occurred amid increasing expectations of a decrease in the US central bank’s benchmark interest rate (Fed Fund Rate/FFR) so that world capital flows shifted from the US to countries and assets considered safe or safe haven assets, especially financial assets in Europe and Japan and to gold commodities.
“Meanwhile, the outflow occurred from capital from developing countries which continued, causing pressure on the weakening of currencies in various developing countries,” said Sri Mulyani.
With the current global conditions, Indonesia will continue to increase its vigilance in facing the dynamics of the global economy. The government will continue to actively carry out early mitigation including through the negotiation and communication process with the US government.
The government is also carrying out deregulation, especially by eliminating non-tariff barriers between various Ministries/Institutions. In addition, efforts to continue to increase and strengthen domestic demand so that it remains maintained through coordinated fiscal and monetary policies.
“Indonesia is expected to be able to control the negative impact of global uncertainty and maintain the stability of the financial system and maintain the momentum of economic growth,” explained Sri Mulyani.
