Trump Re-Election Sparks Economic Concerns in Indonesia
Indonesian officials are warning of potential economic challenges stemming from Donald Trump’s re-election as US President. Luhut Binsar Pandjaitan, Chairman of the National Economic Council (DEN), emphasized the need for Indonesia to adopt a strategic and diplomatic approach with the United States to mitigate potential consequences.
Protectionist Policies and the Impact on Indonesia’s Economy
Pandjaitan highlighted the potential impact of Trump’s protectionist policies on the Indonesian rupiah, stating that they could bolster the US dollar, exerting downward pressure on Indonesia’s currency. “The impact of Trump’s second term of office may bring global economic slowdown, lower global GDP, and increase global inflation. With the strengthening of the US dollar, our rupiah will be affected,”
said Pandjaitan during a public lecture in Jakarta on Monday.
He characterized Trump as a pragmatic political leader who would assertively respond to any policy concerning his strategic interests. Pandjaitan also drew attention to the newly established US Department of Government Efficiency (DOGE), led by Elon Musk, highlighting how it reflects Trump’s determination to cut unnecessary sectors from his government, potentially leading to budgetary changes with global repercussions.
“Musk will probably cut the US budget amounting to USD2 trillion. There will be a lot of efficiency,” Pandjaitan stated, emphasizing the need for Indonesia to anticipate these changes.
Analysts Warn of Trade War Pressure and Energy Transition Setbacks
Bank Mandiri Chief Economist Andry Asmoro echoed these concerns, outlining several risks to the Indonesian economy under Trump’s leadership. Asmoro emphasized that Trump’s “America First” policy direction would likely tighten trade policies and extend the trade war with China. This, he warned, could suppress the global economy and have significant repercussions for Indonesia.
“Apart from the protectionist policies, the trade war will also be getting tougher compared to Joe Biden’s administration,” Asmoro pointed out, highlighting the potential for escalating tensions.
Furthermore, Asmoro highlighted the potential for a slowdown in global energy transition efforts under Trump’s leadership. He noted that policies related to climate change might receive less support, which could slow down global efforts to shift towards cleaner energy sources. This is particularly concerning for Indonesia, which is actively accelerating its own energy transition with international assistance.
Asmoro cautioned that this is a major concern for Indonesia, which is actively accelerating energy transition with international assistance.
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How is the Indonesian government working to mitigate the potential negative impacts of reduced US foreign aid and investment?
I think a lot of people are surprised by this election outcome and even more by some of the changes Trump has made in his second term.
Today we have with us Pandjaitan, Chairman of the National Economic Council (DEN), who has been vocal about his concerns regarding the re-election. Welcome, Mr. Pandjaitan.
**Pandjaitan:** Thank you for having me.
**News Editor:** Let’s jump right in. You’ve mentioned potential economic ramifications for Indonesia due to Trump’s policies. Could you elaborate on what those specific concerns are?
**Pandjaitan:** Certainly. Trump’s protectionist policies have the potential to significantly impact the Indonesian rupiah. A stronger US dollar, often a result of these policies, puts downward pressure on our currency.
Furthermore, his approach to global economics appears to prioritize American interests, which could lead to trade friction and slower global growth. [[1](https://asia.nikkei.com/Opinion/Trump-and-Prabowo-should-enhance-economic-ties-to-counter-China)]highlights how Indonesia seeks to balance its economic relationships with the US and China. Trump’s actions make navigating this delicate balance even more challenging.
**News Editor:** You also mentioned a new US Department of Government Efficiency, led by Elon Musk. How do you see this impacting Indonesia?
**Pandjaitan:** This department, focused on significant budget cuts, raises concerns about potential reductions in US foreign aid and investment, which could directly affect development projects in Indonesia. The global ripple effects of such vast budgetary changes are difficult to predict but are something we must anticipate and prepare for.
**News Editor:** It seems you see a lot of uncertainty ahead for Indonesia in the face of these changes. What steps is the Indonesian government taking to mitigate these potential risks?
**Pandjaitan:** We are actively engaging in strategic dialogues with the US to understand their economic priorities and explore ways to minimize any negative impact on Indonesia.
We are also diversifying our trade partnerships and strengthening relationships with other key economies to ensure our economic resilience.
**News Editor:** Thank you for sharing your valuable insights, Mr. Pandjaitan.
**Pandjaitan:** You’re welcome. I believe open communication and proactive measures will be crucial in navigating the complexities of the global economic landscape in the coming years.
