Jakarta. Indonesia’s central bank expects exports to keep expanding in the second half of 2025 despite heightened global uncertainty from Washington’s sweeping tariff hikes.

The US recently imposed reciprocal tariffs to cover 70 countries, a move that has rattled emerging economies reliant on external demand. But Bank Indonesia (BI) officials struck an optimistic note on Friday, pointing out that Indonesia’s tariffs were cut from 32 percent to 19 percent, easing the blow compared with other trade partners. However, Indonesia made some major trade concessions, including a commitment to import $15 billion worth of American energy products. Indonesia also agreed to get rid of 99 percent of tariff barriers for American industrial and food products.

Indonesia’s relative insulation from the harshest US trade measures comes at a critical moment for President Prabowo Subianto’s government, which is seeking to stabilize growth while financing ambitious infrastructure and social programs. While some neighbors brace for steeper shocks from tariff escalations, BI is betting Indonesia’s mix of competitive manufacturing, resilient domestic demand, and policy support will keep the economy on a steady footing.

“Export performance will improve because our tariffs are relatively lower than before. Our key trading partners, such as China and Europe, also face lower tariffs. This should support exports,” said Juli Budi Winantya, director of BI’s Economic and Monetary Policy Department, during a media briefing in Yogyakarta.

He contrasted Indonesia’s position with that of India and Switzerland, which were slapped with steeper duties than initially expected. “Because tariffs on Indonesia are lower compared with other countries, market confidence is higher. We expect exports to increase going forward,” Juli said.

Still, risks remain. The US tariffs cover not only direct shipments but also rerouted goods through third countries, raising concerns of transshipment penalties. Even so, BI argues the overall outlook is constructive.

Data from the Central Statistics Agency (BPS) show the country’s exports reached $135.41 billion in the first half of 2025, up 7.7 percent from $125.73 billion a year earlier. The surge was driven by manufacturing, which contributed $107.6 billion, marking a robust 16.6 percent year-on-year increase.

Despite the upbeat trade figures, BI expects the current account to stay in deficit this year, though at a “low and healthy level” between 0.5 percent and 1.3 percent of GDP. “Exports and imports of goods and services will still leave a deficit, but it will remain manageable,” Juli said.

Domestically, BI sees economic growth underpinned by household consumption, stronger government spending, and fresh fiscal stimulus rolled out since mid-2025. The central bank has also leaned on monetary easing, cutting its benchmark rate five times by a total of 125 basis points since September 2024 and injecting liquidity through macroprudential incentives.

“These steps are expected to further drive growth in the second half. For the full year, the economy will likely stay above the midpoint of our 4.6 percent to 5.4 percent range,” Juli concluded.

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