Asia Drop-In: Indonesia's weakening policy guardrails – An update on macro and market risks

Concerns about the direction of policymaking in Indonesia have intensified since President Prabowo took office in late-2024. Markets are signaling anxiety over creaking fiscal discipline and the potential erosion of central bank independence following the nomination of the president’s nephew as deputy governor. With its policy guardrails weakening, how at risk is Indonesia’s economic outlook, and what are the implications for financial markets?

In this 20-minute briefing, our economists assessed the state of governance in Indonesian policymaking and its implications for the country’s macro framework, asset-market risk premia and the longer-term outlook.