JAKARTA (Reuters) -Indonesia’s economic growth this year will likely stay around 5% despite trade tensions, its finance minister said on Thursday, stressing a government delegation was still negotiating terms with Washington to try to avoid reciprocal tariffs.
The minister’s outlook is roughly the same growth pace as last year’s 5.03%. The government’s target is 5.2% this year and President Prabowo Subianto has pledged to lift growth to 8% by 2029.
Sri Mulyani Indrawati’s remarks came at an online press conference of Indonesia’s stability board, which consists of its finance minister, central bank governor, head of financial services authority and head of deposit insurance corporation.
The minister and Bank Indonesia Governor Perry Warjiyo were in Washington to attend IMF-World Bank meetings.
A delegation led by chief economic minister Airlangga Hartarto was also in the U.S. capital trying to conclude trade talks within 60 days since its April 17 meetings with U.S. trade officials.
In those meetings, Indonesia has offered to buy more American products as well as cut its own non-tariff barriers so that the United States would not apply a 32% tariff on its exports.
“The government will actively conduct early mitigation, including communicating with the U.S. government and, as instructed by the president, will continue deregulation efforts to reduce trade barriers,” Sri Mulyani said.
“Efforts will also continue to protect domestic demand,” she added.
Indonesia’s financial markets have been hit by capital outflows since the U.S. announcement of reciprocal tariffs in early April. Sri Mulyani said the rupiah’s movements against the U.S. dollar are expected to be stable
Indonesia’s exports to the United States only accounts for just about 2% of its gross domestic product, the government has said, but spillover impact from the trade war could hurt its economy more.
Key exports to U.S. include electronics, apparel and footwear.
(Reporting by Stefanno Sulaiman and Gayatri Suroyo; Editing by Martin Petty)
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