Indonesia’s 2026 Market Outlook: The New Regime

Indonesia’s 2026 market outlook is shaped by a decisive shift toward pro-growth fiscal and accommodative monetary policies, supported by easing global financial conditions and expectations of U.S. rate cuts. Domestically, accelerated government spending, wider fiscal deficits, and dovish Bank Indonesia policy are expected to lift GDP growth to around 5.1% in 2026, revive domestic consumption, and improve system liquidity. Equity markets appear attractively valued, with scope for valuation rerating as yield compression drives a search for returns and earnings growth recovers, although risks remain from rupiah volatility, foreign flow divergence between bonds and equities, and fragile global geopolitical and inflation dynamics.

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