The imposition of lower tariffs compared to other countries is considered capable of maintaining external stability and boosting investor confidence, which supporting stronger investment and drives economic growth.
“Generally, because the tariffs are lower, market confidence is higher. So, we expect exports to increase in the future,” said Juli Budi Winantya, Director of the Economic and Monetary Policy Department at BI, during a media discussion in Yogyakarta on Friday.
Since August 7, the U.S. has expanded its reciprocal tariff scheme from 44 to 70 countries. Some countries, such as India and Switzerland, now face higher tariffs than initially announced.
In contrast, Indonesia’s tariff rate has been reduced from 32 percent to 19 percent.
While there remains an additional risk of tariffs on transhipment, the central bank believes Indonesia’s export outlook will remain positive.
However, Winantya acknowledged that the current account is still expected to post a deficit, but at a low level ranging from 0.5 to 1.3 percent of GDP — a range considered healthy and unlikely to disrupt external stability.
“Exports and imports of goods and services in the current account are still expected to remain in deficit, but the level is still at a healthy level,” Winantya stated.
In the second quarter of 2025, current account deficit stood at US$3.0 billion (0.8 percent of GDP), up from US$0.2 billion (0.1 percent of GDP) in the first quarter.
Apart from external factors, Bank Indonesia also projects that domestic demand will increase in line with government spending on various programs that are expected to boost economic growth in the second half of 2025.
In addition to regular spending, the government is also providing additional fiscal stimulus measures aimed at boosting domestic consumption and economic activity.
On the monetary side, Bank Indonesia has adjusted its benchmark interest rate five times between September 2024 and August 2025, each by 25 basis points and increased liquidity including through the Macroprudential Liquidity Incentive Policy. This combination of fiscal and monetary measures is expected to keep economic growth in 2025 above the midpoint of the 4.6 percent to 5.4 percent range.
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Translator: Rizka Khaerunnisa, Kuntum Khaira Riswan
Editor: M Razi Rahman
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