Research & Stock Picks

Economic Reports

09 April 2025

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Samuel Daily Economic Insights 10 April 2025

Overview

Indonesia is entering Q2 2025 with a bold shift in trade diplomacy as President Prabowo Subianto adopts a “tariff shock therapy” strategy in response to US tariff threats—emphasizing regulatory easing, trade concessions, and economic pragmatism over retaliation. Key reforms include relaxed local content rules, reduced import duties, and streamlined tax procedures to preserve macroeconomic stability and enhance negotiation leverage. Inflation rebounded to 1.03% y/y in March after two months of deflation, driven by higher electricity and food prices, while core inflation remained contained. Financial markets reflected cautious sentiment amid Rupiah volatility and continued capital outflows, though mutual funds and equity inflows showed signs of stabilization. Indonesia’s trade position remains strong, with a February surplus of USD 3.12 billion and robust export growth, even as consumer demand softens. The manufacturing sector continues to expand, albeit at a slower pace, with business optimism still high. Looking ahead, the outlook hinges on effective reform implementation, US policy reciprocity, and the government’s ability to navigate inflationary pressures, capital market volatility, and global trade fragmentation.

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