REPUBLIKA.CO.ID, JAKARTA -- Bank Indonesia (BI) is not convinced that the US fiscal policy will be more aggressive or will toe the position taken by president elect Donald Trump during his election campaign.

BI's Head of Economic and Monetary Policy Department Juda Agung stated on Thursday that the US economic situation will make difficult implementing any aggressive fiscal policy measures.

The current budget deficit of the US has reached 4.4 percent of the GDP and the government debt has risen to 106 percent of the GDP, he pointed out to buttress his argument. "It means the room for fiscal maneuvering may not be there and an aggressive stance as reflected (by Trump) during the campaign will not work. We see the possibility of adjustment in the US fiscal policy making," Agung added.

In addition to fiscal policy, Trump's trade policy also needs to be anticipated since it would significantly affect some countries known for manipulating currency or considered unprofitable for the US. "Based on my knowledge, the US president has the authority to implement a unilateral trade policy towards countries considered not lucrative for the United States," he noted.

However, Agung added, Indonesia does not fall in the list of most vulnerable countries as far as currency manipulation is concerned, unlike Vietnam and Thailand.

China is also basically not on the list but is still likely to be the target of unilateral trade policy on the part of the US. "Every probability is expected to be reflected in the upcoming inauguration speech of Trump," Agung pointed out.

Donald Trump will be sworn in as US' president at the White House, Washington DC, at noon local time (5pm GMT) on Friday, 20th January. During the campaign, the billionaire Republican had promised to implement his economic policies of tax cuts, regulatory reforms and a boost in infrastructure spending to lift US' growth to an annual rate of 4 percent.

As reported by the Associated Press, the new forecast represents a boost of 0.1 percentage point this year and an increase of 0.4 percentage point for 2018, when Trump's stimulus plans would be expected to be phased in. This represents a half-point higher growth than the IMF had forecast in October, before Trump's election.

In contrast, the World Bank last week left its US forecast unchanged at 2.2 percent growth in 2017 and 2.1 percent for 2018, arguing that there was too much uncertainty over the fate of Trump's proposals to incorporate them in a forecast.

Ikuti Whatsapp Channel Republika