Overview
Indonesia’s macro outlook remains broadly stable, though increasingly shaped by fiscal constraints, climate-related risks, and structural policy adjustments. Global institutions continue to project steady growth, but downside risks are mounting from commodity price softness and recurring natural disasters, particularly in Sumatra. Monetary policy has entered a pause phase as Bank Indonesia prioritizes exchange-rate stability and capital flows after an extended easing cycle. On the fiscal side, revenue pressure is narrowing room for maneuver, pushing the deficit closer to its statutory ceiling and intensifying scrutiny over spending efficiency. Industrial and resource-sector governance is also under the spotlight, with new regulations triggering resistance from mining groups and renewed debate over enforcement consistency. Food security remains a core policy priority, as authorities signal confidence in domestic rice sufficiency while scaling up budget allocations. At the same time, institutional reforms—most notably around Danantara—are drawing concern over governance robustness and accountability. Environmental and energy-transition initiatives are accelerating, ranging from waste-to-energy programs to renewable power ambitions. Politically, Papua has emerged as a focal point for social programs and energy policy experimentation. Overall, Indonesia is balancing growth preservation with institutional reform amid rising fiscal, environmental, and governance pressures.