Indonesia’s financial markets continue to show positive performance despite facing several external challenges. Fitra Faisal from Samuel Sekuritas provides an in-depth analysis of current conditions and future projections, supporting the view that the macro assumptions in the 2025 State Budget (APBN) are quite realistic.
In the last week, Indonesia recorded another trade surplus, marking the 51st consecutive time. However, this surplus amounted to only USD 470 million, far below the expected consensus of over USD 2 billion. Despite this, Fitra Faisal emphasized that the increase in imports, particularly for production needs, could be a positive indication of future economic growth. The Purchasing Managers’ Index (PMI) activity is projected to return to expansionary levels as production and inventory increase.
Furthermore, the President’s State of the Nation Address, which highlighted the 2025 Financial Note, provides an optimistic yet realistic view of economic growth, projected at 5.2%. This figure aligns with Samuel Sekuritas’ projection of 5% growth next year. The exchange rate assumption set at IDR 16,100 per USD is also considered realistic, given Samuel Sekuritas’ exchange rate projection of around IDR 16,200.
Regarding the budget deficit, the government has set a target of 2.5% to 3%. Although there are concerns about a widening deficit, Fitra Faisal believes the deficit will be around 2.8% to 2.9%. This is supported by the macro assumption of a bond yield of 7.1%, which is nearly in line with Samuel Sekuritas’ projection of 7.2%. The government appears to have reserved the possibility of additional financing if the deficit widens, which would affect bond yields in the future.
Overall, the current market conditions are still influenced by positive global sentiment, with potential capital inflows into Indonesia’s bond and equity markets. While there is a risk of capital reversal that needs to be monitored, Fitra Faisal sees an opportunity for bond market strengthening, with yields potentially dropping to 6.6%, although they could rise again to 6.9%. Bond tenors recommended for collection are those under 10 years, such as 3, 4, 5, 7, and 9 years.
On the other hand, Indonesia’s equity market is expected to remain in positive territory, with the potential to break through the 7,500 level, although it could drop to 7,300 due to capital reversal. The sectors recommended for investment are cyclical property and healthcare, which are currently showing strengthening momentum.
With realistic macro assumptions and still-positive market conditions, the 2025 State Budget appears to be on the right track to support sustainable economic growth. The right choice of fiscal and monetary policies will be key in maintaining stability and driving Indonesia’s economic growth in the coming years.
