Global Economy Slows Down Amid Reciprocal Tariffs and Uncertainty

The global economy is experiencing a slowdown, with various indicators suggesting that economic growth is slowing in most countries, according to Bank Indonesia (BI) Governor Perry Warjiyo. The impact of reciprocal tariffs imposed by the US and continued high levels of uncertainty have led to weakened business confidence, reduced household consumption, and rising unemployment in the US. China's economic performance has also slowed due to declining exports and weakening domestic demand. The European and Japanese economies are trending downward, while India's economy is showing slight improvement.

Key Takeaways:

• Bank Indonesia estimates that global economic growth in 2025 will be lower than previously projected, at around 3 percent.
• The weak global economic outlook and easing inflationary pressures have prompted several central banks to adopt accommodative monetary policies, except in Japan.
• The probability of a Fed Funds Rate (FFR) cut is increasing, and BI is awaiting the decision of the US Federal Reserve.
• US Treasury yields declined in line with expectations of an FFR cut, pushing down the US dollar index (DXY).
• Global financial market volatility will continue, and Bank Indonesia advises stronger policy responses and coordination to maintain domestic economic resilience.
• Global capital flows into gold commodities are increasing, while flows to emerging markets remain slightly restrained.
• China's economic performance has slowed due to declining exports and weakening domestic demand.
• India's economy is showing slight improvement, supported by fiscal stimulus to boost household consumption.
• The European and Japanese economies are trending downward, with export performance under pressure.
• BI Governor Perry Warjiyo emphasized that global economic uncertainty remains high and needs to be anticipated through stronger policy responses and coordination.

Statistics:

• Global economic growth in 2025 is estimated to be around 3 percent, lower than previously projected.
• The probability of a Fed Funds Rate cut is increasing.
• US Treasury yields declined by of the US dollar index (DXY).
• Gold commodity prices are seeing an increase in global capital flows.
• Emerging markets are experiencing slightly restrained global capital flows.
• US unemployment is rising due to reduced household consumption.
• China's exports have declined due to reciprocal tariffs with the US.

Sources:

• Antara News Agency, "Bank Indonesia Believes Global Economy Slows Down Amid Reciprocal Tariffs and Uncertainty" (17 Sep 2025).
• Bank Indonesia, "Press Conference by Perry Warjiyo, Governor of Bank Indonesia (RDG)" (17 Sep 2025).