Global economic growth faces renewed pressure as Bank Indonesia (BI) projects expansion will fall below 3 percent in 2025. The central bank links this outlook to the United States’ reciprocal tariff policies, which are disrupting international trade and raising uncertainty. BI Governor Perry Warjiyo emphasized that the new measures will weigh heavily on trade flows and growth prospects worldwide.
BI Economic Growth Projection Signals Global Slowdown
In a Board of Governors Meeting, Perry Warjiyo highlighted the negative effects of reciprocal tariffs. “Overall, the trend of global economic growth will decline,” he said as reported by Beritasatu.com. BI revised its projections for several major economies, cutting the United States from 2.1 percent to 2 percent and India from 6.6 percent to 6.5 percent.
In contrast, Europe improved slightly from 0.9 percent to 1 percent, Japan from 0.8 percent to 1 percent, and China from 4.6 percent to 4.7 percent. These changes illustrate how tariff policies reshape global economic dynamics. According to BI Deputy Governor Aida S. Budiman, the combined effect could pull worldwide growth below earlier estimates of around 3 percent.
US Reciprocal Tariff Impact Weakens Trade Outlook
The United States recently expanded reciprocal tariffs from 44 to 70 countries, with rates ranging from low to high. Perry explained that while some tariffs came in lower than earlier announcements, certain nations, including India and Switzerland, face steeper levies. “Some tariffs are lower than the earlier announcement, but several countries such as India and Switzerland face higher tariffs,” he told the media.
The measures are set to dampen India’s export and manufacturing performance, while also driving up the cost of imports for American consumers. BI noted that these tariffs could also slow the US economy itself, with ripple effects on global trade volume. At the same time, Europe, Japan, and China may benefit moderately from lower tariff agreements and fiscal support policies.
Monetary Policy and Inflation Trends Shape 2025 Outlook
Alongside trade tensions, monetary conditions are evolving in ways that may ease some pressure. Perry pointed out that inflation in the United States is expected to ease, reflecting stronger expectations of Federal Reserve rate cuts. “We estimate the Fed Funds Rate in the second half of the year will be cut twice, each by 25 basis points, with higher probability,” he said.
Globally, the trend leans toward more accommodative monetary policies as central banks respond to slower growth. These developments could support financial markets, though they may not fully offset the drag from protectionist trade measures. BI maintains that the balance between easing inflation and rising tariff barriers will define the global economic landscape in 2025.
Trade Uncertainty and Growth Risks Remain High
Despite potential relief from monetary easing, BI stressed that risks remain elevated. Reciprocal tariffs introduce unpredictable dynamics to global trade flows, making forecasts more difficult.
Perry cautioned that the policy adds to global uncertainty and complicates growth strategies. “The policy adds to global economic uncertainty and could reduce the global growth projection,” he warned.
Financial market volatility also remains a short-term threat. BI underscored the importance of safeguarding domestic resilience against external shocks, particularly in emerging markets like Indonesia.
World Economy Braces for Slower Expansion in 2025
BI’s latest projections underline the fragile state of the world economy. With global growth now expected to dip below 3 percent in 2025, the impact of US reciprocal tariffs looms large. While monetary easing offers some support, the risks of trade disruption and financial volatility persist.
As Perry Warjiyo emphasized, reciprocal tariffs could burden the US itself, as rising import costs slow its economy with broader spillovers worldwide. Policymakers and markets must prepare for a challenging period ahead as trade policies and financial dynamics continue to reshape global growth prospects.
Source: beritasatu.com, rmol.id
Image: Bloomberg / Rosa Panggabean
