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, at 0800 GMT/1600 SGT on Tuesday 27 January, our economists will assess 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. During this session, economists from our macro and markets teams will answer your questions as they address key issues, including:

• Why the government will increasingly struggle to stick to the 3% of GDP budget deficit limit;
• Whether Indonesia is following Turkey down the well-trodden path towards higher inflation and interest rates;
• What weaker policy guardrails mean for the rupiah, the monetary policy outlook and risk premia across Indonesian assets.