Overview

Global economic conditions remain fragile as major economies balance growth targets against lingering structural pressures, geopolitical tensions, and policy recalibration. China’s reaffirmation of its 2025 growth target underscores Beijing’s confidence, even as weak consumer sentiment and post-pandemic scarring persist. Indonesia enters the new year facing intersecting challenges across trade, energy pricing, food security, and industrial competitiveness. Fiscal and quasi-fiscal tools continue to be deployed cautiously, with mixed effectiveness in stimulating real-sector activity. External trade pressures, particularly from the United States, are increasingly shaping outcomes for labor-intensive industries such as textiles and coal. At the same time, policy priorities around food self-sufficiency and energy affordability are becoming more explicit heading into 2026. Financial-market stress remains visible in state-owned enterprises, where balance-sheet fragility and governance issues persist. Political leadership continues to emphasize empathy and state presence amid disaster recovery efforts in Sumatra. Regulatory changes, including criminal law reform and social policy expansion, point to a more interventionist governance stance. Overall, Indonesia begins 2026 navigating external uncertainty while attempting to stabilize domestic demand and institutional credibility.