Indonesia Country Risk Rating

Overall risk for Indonesia remains assessed as medium. The current President of Indonesia, Prabowo Subianto, has seen declining popularity, as economic growth is failing to flow down to all sections of society and causing discontent over cost of living pressures. Additionally, pressure from the president to the media, plus a corruption case on the free meals program, have raised tensions around the government and caused domestic discontent. Political violence thus still has a risk rating of medium high, with concerns remaining about a repeat of the 2025 deadly anti-government protests. Additionally, President Subianto’s decision to expand the military’s role throughout the nation has created a slight opening for opposition parties ahead of the 2029 election. Political interference remains assessed as medium, while legal & regulatory risk is unchanged at medium-high rating. The risk of doing business also remains medium-high.

On the economic front, the IMF forecasts GDP growth at 5% in 2026 and 5.1% in 2027, though the August Flores earthquake could cause some adverse impact in Q3. Though the unemployment rate is a low 4.7%, informal jobs are producing insecurity and graduates are finding it more difficult to get jobs. This is causing concerns that economic growth is not benefitting all parts of society. The other big issue is Indonesian Rupiah weakness, both due to the Iran war energy shock but also concerns about government policy. This has been compounded by parliament adding jobs/growth to Bank Indonesia’s mandate and perceptions of political interference (President Prabowo nominated his nephew to be deputy governor). Even so, inflation is projected by the IMF to slow to 2.6% in 2027 after 3.0% in 2026. Government debt to GDP is predicted to remain reasonably stable at 41.5% in 2026, though some concerns remain that the budget deficit could push to the 3% legal limit given adverse effects from the Iran war and also intermittent government programs. For now the government’s inability to provide stimulus is assessed as medium-low.