Overview

Global conditions at the start of 2026 are increasingly shaped by geopolitical shock, uneven economic recovery, and heightened policy intervention across major economies. The reported escalation of U.S. military action in Venezuela has added a new layer of geopolitical risk, with spillovers already visible in global commodity prices, particularly gold. Advanced economies continue to recalibrate trade and industrial policy, as seen in Australia’s decision to halt its dumping probe into Indonesian steel. Indonesia’s macro signals point to moderation rather than reversal, with manufacturing activity, trade balances, and inflation all cooling from recent highs while remaining broadly stable. Domestic demand remains the primary growth anchor, supported by tax relief for labor-intensive sectors and relatively contained inflation. External headwinds are becoming more evident, especially through weaker exports and prolonged softness in global manufacturing demand. Policy focus is increasingly split between short-term stabilization and medium-term downstream investment acceleration via Danantara. Political developments reflect rising scrutiny of foreign policy positioning and governance accountability. Social and disaster-related recovery efforts continue to absorb fiscal and administrative attention. Overall, Indonesia enters early 2026 balancing external volatility with a domestically driven, but still constrained, growth trajectory.