Indonesia Economic Update 25 May 2026
KBVS ECONOMIC UPDATE
Monday, 25 May 2026
Policy Noise and Time Inconsistency: Shifting Expectations in Indonesia's Financial Markets
Despite resilient macroeconomic fundamentals, Indonesia's financial markets are experiencing a broad-based confidence shock rooted in policy noise and time inconsistency. This tension reflected in the depreciation of the Rupiah to an all-time low of IDR17,705/USD, a sharp -32.5% decline in the JCI from its peak, rising government bond yields across the curve, and a surge in 5-year CDS premiums.
Amid government communication that has appeared increasingly defensive and dismissive of market concerns, authorities are now being urgently challenged to align political ambitions with fiscal realities through stronger inter-agency communication coordination and improved governance transparency, to prevent the ongoing confidence shock from escalating into a deeper macroeconomic crisis.
Regards,
Khairunnisa N Syahfiraputri & Anggun Rahmadani – KBVS Research Team