REPUBLIKA.CO.ID, JAKARTA -- Finance Minister Sri Mulyani said Indonesian Government should be wary of the trade dynamics policy between United States (US) and China. She said the tension is predicted to continue in the long term.

“Indonesia needs to be wary that there will be high dynamics between Western countries and China. It can cause spillover,” said Sri on Monday (July 2).

Sri said the fluctuation would bring impact to some economic indicators. It could pose pressure to economic growth.

She said that Indonesia was faced to a fluctuative global atmosphere. "The rising interest rate of Bank Indonesia (BI) would depressed economic growth, it can’t be avoided,” Sri added.

Furthermore, Sri explained the world situation is currently experiencing a new normal condition. In this situation, according to her, the interest rate increases, the uncertainty occurs due to tariff war, as well as changes in oil prices.

Sri said adjustments due to the improving economy in US will continue. In addition,  eactions from other countries affected by US policy on trade are also on the way.

Government will continue to manage the derrivatives impact on the Indonesian economy in the long run. Sri said the government will try to mix policy to fill interest rate policy and credit relaxation by BI.

“We are adjusting the fiscal through incentives, taxes, as well as the expenditure side, in order to reduce the pressure in our economy," she said.

Earlier, BI has decided to raise its reference rate BI 7 Days Reverse Repo Rate by 50 basis points. With the increase, interest rates are now set at 5.25 percent from 4.75 percent previously.

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