Jakarta. The CEO of Bank Rakyat Indonesia (BRI), the country’s largest state-run bank by assets, predicted on Wednesday that the return of Donald Trump to the White House could reignite US trade protectionism, placing additional pressure on the global economy and potentially slowing down economic growth in Indonesia.

Citing analyses by BRI’s economists, Sunarso explained that Trump’s protectionist policies would likely increase US inflation, prompting the Federal Reserve to raise benchmark interest rates.

“The protectionist approach could lead to an estimated 8.5 percent contraction in US trade, which would impact its trading partners,” Sunarso said during a hearing with lawmakers at the legislature building in Jakarta.

According to BRI’s analysis, a renewed US-China trade war could trigger retaliatory measures from China. “For Indonesia, economic growth could slow to between 4.73 percent and 5.03 percent. If trade war tensions expand to other countries, our growth might contract further to a range of 4.62 percent to 4.92 percent,” Sunarso added.

He added that while Indonesia’s trade is more heavily influenced by China than the United States, the rivalry between the world’s two largest economies would inevitably have repercussions for Indonesia.

Meanwhile, Royke Tumilaar, CEO of Bank Negara Indonesia (BNI), another major state-owned bank, echoed similar concerns. He noted that Trump’s protectionist policies could tighten both global and domestic liquidity due to the return of high interest rates.

“The likelihood of a lower benchmark interest rate is minimal, which could exert further liquidity pressure on the domestic banking sector by 2025,” Royke said.

Add as a preferred source on Google +