International Trade: An Engine for Economic Growth Amidst Global Uncertainty
International trade has long been a vital driver of a nation’s economic growth. However, the current state of global trade is no longer within the era of previous globalisation. Geopolitical tensions, shifts in trade policies, trade wars, and supply chain fragmentation have made global trade activities increasingly volatile. UNCTAD noted that while global trade reached a record of over US$3larillion in 2025, trade patterns are increasingly influenced by geopolitical friction and policy changes.
For Indonesia, these conditions represent not only a threat but also an opportunity to strengthen its position as a country with a large production base and market. The question remains whether global trade fragmentation should be viewed as a barrier to Indonesia’s economic growth or as an opportunity to enhance national competitiveness.
In my view, these conditions can be an opportunity if Indonesia can develop more diverse trade strategies, increase product value-add, expand export markets, and strengthen domestic industries.
Firstly, international trade remains a crucial source of economic growth. Data from the Central Bureau of Statistics (BPS) shows that Indonesia’s export value from January to May 2026 reached US$115.36 billion, an increase of 3.02% compared to the same period in 2025. During this period, non-oil and gas exports also rose by 3.89% to US$110.19 billion. These figures demonstrate that despite poor global economic trade conditions, Indonesia’s trade activities continue to play a vital role in generating foreign exchange and maintaining the trade balance.
Secondly, trade fragmentation can open doors for Indonesia to enter new supply chains. Reports from July 2026 indicated that global companies are relocating factories due to changes in supply chains, international trade fragmentation, and rising geopolitical tensions. The Minister of Industry described this condition as an opportunity for Indonesia to attract manufacturing investment. This means Indonesia does not have to remain merely an exporter of raw materials; it can leverage global supply chain shifts to attract investment, develop processing industries, create jobs, and increase product value before exporting.
Thirdly, market diversification is becoming increasingly important. Dependence on a few specific export destinations increases risk in the event of tariff changes, geopolitical conflicts, or economic slowdowns in those nations. Therefore, Indonesia needs to expand trade relations across various regions while utilising regional and bilateral trade cooperation.
Fourthly, trade fragmentation also carries risks that cannot be ignored. In the World Trade Report 2026, the WTO envisioned that a more geopolitically fragmented world scenario could lead to a 5.1% decrease in global GDP and an 18.6% decrease in global exports compared to a more integrated trade system scenario. Consequently, Indonesia must maintain a balance between opening international market access and strengthening national economic resilience. International trade does not mean ignoring domestic industry, but rather making national industries more capable of competing in the global market.
Fifthly, improving export quality must be a priority. Indonesia possesses vast natural resources, but exports based on raw commodities are vulnerable to global price fluctuations. Therefore, downstreaming, the development of manufacturing industries, technological innovation, human resource improvement, and the strengthening of value-added products are essential parts of the strategy to face changes in global trade.
Bank Indonesia also noted that in the second quarter of 2026, Indonesia’s balance of payments performance remained stable despite high global trade volatility. Bank Indonesia views the export outlook as being supported by the price increases of several of Indonesia’s leading commodities and the positive impact of reduced reciprocal tariffs from the United States.
Thus, international trade still plays a vital role as an engine for Indonesia’s economic growth, even as the global environment becomes increasingly threatened. Challenges such as geopolitical tensions, trade policy changes, and supply chain fragmentation may indeed increase risks to the economy. However, these changes can also create opportunities for Indonesia to attract investment, expand markets, increase product value, and strengthen its position in the global supply chain.
The key lies in Indonesia’s ability to evolve from being merely a market for foreign products or a supplier of raw materials into a country that produces value-added products and services capable of competing internationally. Global uncertainty is unavoidable, but its impact can be managed with the right strategy. Indonesia must use the shifts in world trade as momentum to strengthen national industry, diversify markets, improve human resource quality, and encourage innovation.
Ultimately, geopolitical challenges and trade fragmentation are not merely threats. With the right policies and strong competitiveness, these changes can serve as an opportunity for Indonesia to elevate its status in the global economy.