UNAIR NEWS 鈥 The Department of Sharia Economics Faculty of Economics and Business (FEB) recently held an online guest lecture titled 鈥淏ank Indonesia鈥檚 Policy Response to Global Economic Dynamics.鈥 The event, conducted on Saturday, May 3, 2025, featured Firman Hidayat, a senior economist from Bank Indonesia鈥檚 South Kalimantan branch.
During the session on central banking, Hidayat highlighted the evolving landscape of the global economy. 鈥淪ince President Trump took office, his administration has implemented numerous disruptive policies, notably the imposition of high import tariffs, particularly on goods from China,鈥 he explained.
He noted that such protectionist policies are not unprecedented in U.S. history. 鈥淭hough the U.S. has used similar strategies in the past, the global tariff trend had been declining under the World Trade Organization. However, this pattern began to reverse during Trump鈥檚 presidency,鈥 Hidayat said.
Economic consequences
Hidayat warned that Trump鈥檚 tariff policies are contributing to a global economic slowdown. One of the clearest indicators of rising uncertainty, he said, is the sharp increase in gold prices, particularly in early 2025. 鈥淕lobal uncertainty has only deepened since the imposition of these tariffs,鈥 he observed.
He added that uncertainty is also reflected in the sluggish movement of oil prices, a result of weakening global economic conditions that have dampened demand and are likely to keep pressure on oil prices moving forward.
Another major indicator, Hidayat said, is capital flow. When global uncertainty rises, investors tend to pull out from emerging markets and redirect funds to more stable regions such as Japan and Europe. 鈥淚n addition to reduced capital inflow to emerging markets, even the U.S. is seeing a decline in foreign capital,鈥 he remarked.
Domestic impact
According to Hidayat, global disruptions can influence Indonesia鈥檚 economy through three primary channels. The first is trade, which may experience both direct and indirect effects. 鈥淒irectly, U.S. tariffs lower demand for Indonesian exports鈥攅specially textiles. Indirectly, these policies affect Indonesia鈥檚 trading partners, which then impacts Indonesia鈥檚 own trade performance,鈥 he said.
The second channel involves financial markets, particularly foreign capital movements and investment relocation. High tariffs on Chinese products may push investors to shift production to other countries, including Indonesia. 鈥淚nvestment relocation is a real possibility when producers seek more affordable alternatives due to rising costs,鈥 Hidayat added.
Despite global uncertainties, Indonesia鈥檚 economy remained stable in the first quarter of 2025. Household consumption remained strong, supported by government spending, holiday bonuses (THR), and other fiscal measures. Non-construction investment also continued to rise, reflected in increased imports of capital goods, particularly heavy equipment. Hidayat credited this resilience to sound monetary, macroprudential, and payment system policies.
Bank Indonesia maintained its key interest rates: the BI Rate at 5.75 percent, the Deposit Facility Rate at 5.00 percent, and the Lending Facility Rate at 6.50 percent. 鈥淭hese decisions aim to preserve exchange rate stability in line with our economic fundamentals,鈥 he concluded.
Author: Rizma Elyza
Editor: Yulia Rohmawati
