Can Prabowo’s economic policies steer Indonesia through troubled waters?

“We see that global geopolitical escalation [creates] challenges for global commodity prices…,” said Arsjad.

Indonesia is a major producer of commodities such as coal, palm oil and nickel.

Despite the geopolitical challenges, Arsjad is optimistic Indonesia’s economic growth will be “solid.”

Kadin projected economic growth for all of 2024 will be around 4.9 to 5.1 per cent, driven by domestic consumption and investments. This is slightly lower than Finance Minister Sri Mulyani Indrawati’s forecast of a 5 to 5.2 per cent growth for the year.

Her comments come following the assassination of Hamas leader Ismail Haniyeh on Wednesday, which saw oil prices rise nearly 3 per cent before levelling off the next day.

Sri Mulyani expects the country’s second quarter economic growth to slow to 5 per cent, slightly down from 5.11 per cent recorded in the first quarter. The data will be released on Monday.

“Consumption has been weakening due to inflation and currency depreciation, and investment has been stagnant due to weak external factors and uncertainty in domestic politics,” said Negara.

China, which is Indonesia’s largest trade partner, continues to struggle with its economy. As such, Negara expects Indonesian exports to China to decline.

“Exports also do not look very good, given the slower global economy,” said Negara, adding that the government seems to be unable to avoid rising budget deficit and higher debt level.

Indonesia has laws mandating that the annual budget deficit cannot exceed 3 per cent of GDP and set a maximum debt-to-GDP ratio of 60 per cent of GDP.

Manggi Habir, an independent economist and former fellow at the Regional Economic Studies Programme of the ISEAS – Yusof Ishak Institute, said Indonesia’s debt-to-GDP ratio