Fixed Income Update 09 Jan 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 9 January 2024
The Global Situation Remains Unfavorable
Concerns over global economic instability remain a key factor driving risk-off behavior among investors. This sentiment is fueled by uncertainty surrounding the policies that President-elect Trump may implement following his inauguration. Even prior to taking office, Trump has already made several controversial statements regarding the Gulf of Mexico, Greenland, and a push for Canada to become the 51st state of the United States. Adding to the global unease, political instability within the European Union, particularly in Germany and France, further exacerbates global volatility.
Domestic developments provide a positive outlook for 2025 on the domestic front, several developments are expected to support Indonesia's economic growth. The decision not to increase VAT to 12%, the 6.5% average increase in minimum wages (UMP) for 2025, and various economic stimulus programs are anticipated to boost domestic demand. Annual inflation has reached a record low, foreign exchange reserves have climbed to an all-time high, and the Manufacturing PMI has returned to expansion territory. Moreover, the fiscal deficit remains well-managed at 2.29% of GDP. These factors collectively provide a solid starting point for Indonesia's economic performance in the upcoming year.
Regards,
KBVS Research Team