Highlights

• Investment momentum remained resilient but external uncertainty persists: Foreign direct investment (FDI) increased 27.4% YoY in 2Q26, marking the strongest growth since 4Q24. While investment inflows continue to support Indonesia's manufacturing and downstream sectors, sustained global uncertainty could moderate investment momentum going forward.

 

• Fiscal credibility remained supportive amid rising external risks: S&P reaffirmed Indonesia's BBB/A-2 sovereign rating with Stable Outlook, reflecting some confidence in fiscal stabilty. However, higher oil prices, tighter global financial conditions, and rupiah volatility remain key downside risks to the macro outlook.

 

• Downstream industrialization progress: Danantara advanced IDR225tn of strategic downstream projects, while preparations for the B50 biodiesel mandate moved forward. Although these initiatives strengthen long-term structural prospects, their near-term economic impact is likely to materialize gradually.

 

• External pressures continued to build: Elevated geopolitical tensions, firm oil prices, and resilient U.S. economic data reinforced expectations of higher-for-longer global interest rates, maintaining pressure on emerging-market assets and regional currencies.

 

• Policy efforts focused on strengthening resilience: Authorities continued advancing tax reforms, financial market development, and strategic investment initiatives to improve economic resilience, although external uncertainties are likely to keep market sentiment cautious in the near term.