The statement was delivered by BI Governor Perry Warjiyo in an online press conference on Wednesday, following the September 2025 BI Board of Governors Meeting (RDG).
He explained that various indicators show economic growth is slowing in most countries, with widening disparities between them.
In the US, business confidence has weakened as tariff policies led to reduced household consumption and rising unemployment.
China’s economic performance has also slowed due to declining exports, particularly to the US, as a result of reciprocal tariffs, along with weakening domestic demand, especially in investment.
The European and Japanese economies are also trending downward, with export performance under pressure. Meanwhile, India’s economy is showing slight improvement, supported by fiscal stimulus to boost household consumption.
“Given these developments, Bank Indonesia estimates that global economic growth in 2025 will potentially be lower than previously projected, at around 3 percent,” Warjiyo said.
He added that the weak global economic outlook and easing inflationary pressures have prompted several central banks to adopt accommodative monetary policies, except in Japan.
BI also sees a growing probability of a Fed Funds Rate (FFR) cut, in line with rising US unemployment and the downward trend in domestic inflation.
“The probability of a Fed Funds Rate cut is also increasing, and we will await the decision tomorrow,” Perry said.
In global financial markets, US Treasury yields declined in line with expectations of an FFR cut, pushing down the US dollar index (DXY).
With uncertainty remaining high, Warjiyo noted that global capital flows into gold commodities are increasing, while flows to emerging markets remain slightly restrained.
“Global financial market volatility will continue, so this needs to be anticipated through stronger policy responses and coordination to maintain domestic economic resilience,” he added.
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Translator: Rizka Khaerunnisa, Katriana
Editor: Primayanti
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