United States Presidential Election and Its Impact on the Global Economy

Joe Biden give a victory speech on Saturday afternoon local time or Sunday at 08:00 WIB. Biden’s victory will affect the global economy as well as Indonesia, although not directly. The trade war has indirectly suppressed the performance of world exports and imports and has harmed the global economy, including the Indonesian economy. The trade war resulted in Indonesia being targeted as a country experiencing adjustments to trade barriers, both rates and non-rates. The imposition of this import duty makes Indonesian products uncompetitive. This is because the price of the exported product will be higher, so there is concern that it will be unable to compete.

Joe Biden, in his economic policy manifesto, emphasized that he would carry out a policy that was 180 degrees different from Trump. Biden will carry out systems such as raising various taxes, including corporate taxes which are expected to rise by 15% s before the Trump era and income taxes. Biden promised to provide a much bigger fiscal stimulus than Trump, which is around the US $ 2.5 trillion (Rp.36.5 quadrillion) during the 2021-2024 period. This is very influential in the global economy because the American economy is 30% of the global economy.

Biden is expected to make the world economic recovery faster, which is up 4.2% in the 2020-2024 period. Meanwhile, if Trump is re-elected, the US economy is projected to grow by only 3% in the same period. Global economic growth since 2019 has decreased due to the trade war between the United States and China and coronavirus.  Indonesia as a developing country, into a contraction of -5.23% in the third quarter of 2020. Biden will resolve trade disputes with China on a multilateral basis, through the world trade organization (WTO). This will accelerate economic growth because world commodity prices such as nickel, oil, CPO and metals such as gold will be higher.

Indonesia is the 50th trading partner on the list of trading partners for Indonesia, America is one of the leading destinations for Indonesia’s non-oil and gas exports besides China and the European Union. Indonesia’s five mainstay export products to the United States are clothing products, rubber products, footwear, electronic products and furniture. If the US-China trade war continues, it will impose high import duties on imported products from China. This will add to the burden on China investors who own factories in Indonesia and force them to look to other countries for investment.