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The Inevitable Divergence:

Navigating Sustainable Upturns In an Ever-shifting Market Climate

With seemingly no end in sight for the post-COVID 19 pandemic regainment and global tension spillover, the worldwide economic condition remains to fluctuate - pointing to the upsurging risk of inflation, soaring commodity prices, and worsening supply chain. Regarding the agitating 9.1% inflation in the US recorded in July 2022, the Fed has alerted investors to expect more robust monetary policies with quantitative tightening measures to battle inflation. Amid this more arduous context, the world economic state is projected to undergo an alacritous decline, primarily in emerging markets.

Regardless of the worldwide fluctuations, global market uncertainty acts as a double-edged sword - with some regions gaining substantial competitive advantage whilst others are forced to end their economic optimism. The geographically and politically advantaged Indonesia finds itself on the positive side of the spectrum; as of July 2022, the country's economic growth lingers at 5%. To foster said growth amid the emerging risk of stagflation, Bank Indonesia has taken initiatives to increase the number of public spending and business activities following the ongoing market reopening. 

Zooming out, volatile market conditions and relentless geopolitical tension have upheaved the probability of the world's largest economies diverting, thus triggering a global recession. Despite several regions bracing on the brink of the red zone, the International Monetary Fund (IMF) claimed that Indonesia's economy is relatively safe from recession. The country's trade surplus has been breaking records, accumulating US$24.9 billion throughout the first half of 2022, fueled by the commodity boom and downstream industrialization. Furthermore, the upcoming 2024 election is anticipated to increase consumer confidence and public spending. 

However, with global economic uncertainty continuing to loom, questions regarding Indonesia's position have surfaced. Even though the country's outlook remains attractive, investors are concerned by excessive government subsidies in efforts to maintain the current positive trends. Reflecting on the once-sought-after tech sector's sudden plunge in early 2022, it is evident that the market proves to be unpredictable during these macroeconomic downturns. Therefore, reckoning which sectors will achieve sustainable growth in the upcoming times become investors' primary focus.

The aforementioned long-term repercussions of the COVID-19 recovery and global tension spillover have raised a number of questions. How will investors behave in encountering market uncertainty? How will Indonesia's economy maintain its current upward trajectory? Then, how will the currently-advantaged Indonesia fare against the possibility of the upcoming global recession? And which sectors can sustain their drive to consolidate the market? Lastly, how does this macroeconomic instability influence the forthcoming capital market landscape?

These questions represent the backdrop of our theme: to fathom how investors deal with macroeconomic uncertainties, global disputes, and an ever-shifting market climate.



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