Indonesian economist: US economic recession will seriously affect the prospects of the growth of emerging economies

Xinhua News Agency, Jakarta, August 6 (Reporter Yu Qianliang Zheng Shibo) Chief Economist, Permata Bank, Indonesia, Joe Suya Pardid, said in an exclusive interview with Xinhua News Agency. It is a major impact of emerging economies including Indonesia.

Josia said that the GDP in the United States has shrunk for two consecutive quarters and has fallen into a technical decline. In the context of the U.S. inflation rate soared to the highest level in the past 40 years, US consumption has begun to slow, and domestic demand has weakened its economic performance. It is expected that the US economy will perform worse in the next 12 months, which may further drag the world economy.

On August 1, vendors set up temporary stalls on the streets of Jakarta, Indonesia. Xinhua News Agency reporter Xu Qin

Josia believes that the United States and other ASEAN countries such as Indonesia regard the United States as an important commodity export market, and exports are bound to be affected by the decline of the US economy. It is necessary for emerging economies to find new trading partners, vigorously strengthen economic fundamentals, expand and stimulate domestic demand to reduce the impact of the US economic recession.

He pointed out that concerns around the Federal Reserve's interest rate hikes and the decline of the US economy will also stimulate market risk aversion, leading to capital outflows from emerging economies, thereby triggering debt issues and depreciation of the local currency. Emerging economies will be forced to introduce various policies to stabilize the exchange rate.

He said that as far as Indonesia is concerned, the Indonesian government bonds held by foreign capital have decreased by about 7.8 billion US dollars in the short term, which is an important reason for the weak exchange rate of the Indonesian shield to the US dollar.

Jona predicts that as the Indonesian shields weaken and input inflation will rise, more industries in Indonesia will be affected. The Indonesian central bank may increase interest rates in the second half of this year, and interest rate hikes will increase the cost of borrowing costs of various domestic departments and institutions, dragging down the Indonesian economy.

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