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Global markets are facing increasing volatility as attention shifts from trade disputes to deeper structural risks, such as persistent supply chain disruptions and inadequate global policy coordination. Despite rising debt and a weakening bond market, capital continues to flow into the US, supported by strong corporate earnings and resilient equity valuations. Meanwhile, gold prices are climbing in response to heightened geopolitical tensions. Emerging markets, once expected to gain, are now underperforming due to weak economic fundamentals and growing policy uncertainty. Slowing growth in China has prompted firms to ramp up exports, intensifying competition and putting pressure on open economies. This is straining global manufacturing and trade, though lower input costs may provide short-term relief for consumer-driven markets.
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Indonesia's macroeconomic landscape reflects cautious optimism in the face of persistent geopolitical tensions to volatile trade dynamics, and tightening financial conditions. Flagship initiatives such as the Free Meal program and Danantara investments are still in their early stages, with 2025 marking a transitional year and a more visible impact expected by 2026. In parallel, the rising presence of domestic bullion banks aligns with these initiatives, boosting the gold industry by integrating producers with the financial ecosystem, reducing net gold imports, and promoting downstreaming facilities, strengthening Indonesia’s financial sovereignty. Despite headwinds, Indonesia’s bond market stands out for its resilience, continuing to attract foreign inflows and offering stability amid regional turbulence. The government's capacity to effectively deploy available capital and execute its programs will be the critical determinant for unlocking substantial economic gains.
Indonesia’s capital market demonstrated resilience amidst persistent global uncertainty. The Jakarta Composite Index (JCI) rebounded swiftly to 6,927.68 by the end of Q2 after declining to a low of 5,882.60. Despite a 1.92% year-on-year contraction, this sharp recovery is expected to reinforce market confidence. Looking forward, domestic initiatives are anticipated to strengthen and accelerate the ongoing market recovery. The Social Security Administrator (BPJS) has announced plans to increase its allocation to domestic equities, potentially unlocking substantial capital inflows and reinforcing investor confidence. Meanwhile, Danantara’s mandate to restructure and strengthen state-owned enterprises to enhance corporate fundamentals contributes to long-term market stability. These developments mark a potential inflection point for Indonesia’s equity market, setting the stage for market recovery and greater domestic participation in 2026.
Sectoral performance reflects Indonesia's nuanced resilience amid global uncertainty. Consumer sector remains a consistent pillar, benefiting from preserved purchasing power and stable household demand. The mining sector, driven by global demand and Indonesia’s mineral wealth, including precious metals such as gold, is advancing downstream projects like smelter expansion and coal gasification by 2025, supported by Bullion Bank initiatives that strengthen the domestic gold ecosystem. The energy sector continues to advance, supported by Danantara, with one of its investment priorities directed to promoting sustainable and long-term energy resilience, though outcomes remain tied to execution. These sectors are reinforced with government flagship initiatives such as Danantara to support the continuous growth of these interconnected sectors.
The economic resilience is being tested by structural risks, fragmented policy responses, and weakening fundamentals across key markets, which raises preeminent questions. How can the global economy withstand long-term risks and weak policy coordination? In what way does Indonesia translate its policy-driven initiatives into tangible economic outcomes amid execution risks and a fragile external environment? How can Indonesia maintain the trajectory of its equity market recovery while ensuring broader participation from domestic investors to enhance market resilience? To what extent will the convergence of domestic demand, downstream industrialization, and strategic energy initiatives define Indonesia’s sector-led recovery? Can the Indonesian government execute strategic capital deployment effectively to unlock latent market potential amid prevailing global macroeconomic headwinds?