(Bloomberg) --
Indonesia needs “a better immune system” to ward off external risks -- including from President Donald Trump’s tweets that are rattling the outlook for Southeast Asia’s biggest economy, Finance Minister Sri Mulyani Indrawati said.
Indonesia faces uncertainties ranging from the U.S.-China trade war and protectionism to Brexit, fluctuating commodity prices, moderating growth in China, geopolitics and climate change, Indrawati said Thursday at a forum in Jakarta. After twice revising down projections for economic growth this year, she said the country must preserve fiscal room to maneuver “because there is no guarantee the world will keep growing positively.”
“Each tweet made by Trump affects sentiment, expectations and projections for the economy,” Indrawati said. “In order to anticipate a global spillover, we need to develop a better immune system to prevent contagion.“
Indonesia is projected to become the world’s fifth-largest economy within the next 25 years, Indrawati said. The population is expected to grow from 265 million now to 319 million by 2045, while per capita income -- $3,840 last year, according to the World Bank -- is projected to reach $23,199.
Still, Indonesia’s rise is not guaranteed, Indrawati warned.
“In order to achieve that, we need to address infrastructure, human capital, technology, government bureaucracy, spatial planning, as well as economic and financial resources,” she said.
“Friendlier regulations are needed to improve Indonesia’s productivity and competitiveness,” Indrawati said, pointing to a call from President Joko Widodo for reforms to remove “handcuffs” limiting the economy. About 70 laws deemed to be hampering investment are now under review, she said.
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