TEMPO.CO, Jakarta - Bank Indonesia (BI) Governor Perry Warjiyo said global economic uncertainty has slightly diminished, though it remains elevated due to ongoing reciprocal tariff tensions involving the United States and persistent geopolitical instability in the Middle East.
He noted that the U.S. tariff measures have contributed to a global economic slowdown.
“Various indicators show that the U.S. tariff policy has affected the slowdown of the global economy,” said Perry during a virtual press conference on Wednesday, June 18, 2025.
Perry explained that economic growth in developed countries, including the United States, Europe, and Japan, is showing a downward trend, despite the implementation of expansionary fiscal and loose monetary policies. He also pointed out signs of a slowdown in China’s economic performance.
“China's economy is also slowing down due to declining exports, especially to the U.S., amid a domestic demand slowdown,” he said. On the other hand, India is expected to post solid growth, mainly driven by robust investment levels.
Given these global developments, BI maintains its forecast for global economic growth at 3 percent for 2025. Perry added that inflationary pressure in the United States has eased in line with the economic deceleration.
However, inflation in goods has increased, driven by former President Donald Trump’s tariff policies, which has reinforced expectations for a future reduction in the Fed Funds Rate (FFR).
“With these developments, the prospects for global economic growth in 2025 remain at 3 percent,” Perry said.
Regarding global financial markets, Perry noted an ongoing shift of capital flows away from the United States toward safe-haven assets and financial instruments in emerging markets.
This trend has contributed to a continued weakening of the U.S. dollar index (DXY) against both advanced and emerging market currencies (ADXY).
Looking ahead, BI anticipates that global economic uncertainty will persist, fueled by continued U.S. tariff negotiations with various countries and rising geopolitical tensions in the Middle East.
“This condition requires caution and strengthened policy responsiveness and coordination to maintain external resilience, stability, and drive domestic economic growth,” Perry emphasized.
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