ASIATODAY.ID, JAKARTA — S&P Global Ratings has reaffirmed Indonesia’s sovereign credit rating at BBB for long-term debt and A-2 for short-term obligations, maintaining a Stable Outlook and reinforcing investor confidence in Southeast Asia’s largest economy.
The decision keeps Indonesia in the investment-grade category, reflecting confidence in its economic resilience, prudent macroeconomic management, fiscal discipline, and ongoing structural reforms despite heightened global risks.
In its latest Research Update, “Indonesia Ratings Affirmed At ‘BBB/A-2’; Outlook Stable,” S&P said Indonesia’s credit profile continues to benefit from steady economic growth, strong domestic demand, manageable debt levels, and policy credibility.
The affirmation comes as major international institutions maintain a broadly positive but cautious outlook for Indonesia’s economy in 2026, with growth expected to remain around the 5% range amid geopolitical tensions, volatile energy markets, and tighter global financial conditions.
Global Institutions Maintain Indonesia Growth Outlook
S&P projects Indonesia’s economy to expand by 5.1% in 2026, with average growth of around 4.9% during 2026–2029. The agency highlighted Indonesia’s strong economic momentum after GDP growth reached 5.6% year-on-year in the first quarter of 2026, supported by government spending and faster budget implementation.
The World Bank expects Indonesia’s economy to grow by 5.0% in 2026, noting that external pressures, including global uncertainty and weaker investment momentum, could weigh on growth. However, the institution projects growth could recover to around 5.2% in 2027–2028, supported by structural reforms, stronger private investment, and improved business conditions.
The International Monetary Fund (IMF) also maintains its projection of 5% growth for Indonesia in 2026, citing continued domestic resilience despite elevated global uncertainty.
Meanwhile, the Organisation for Economic Co-operation and Development (OECD) takes a more cautious view, projecting Indonesia’s GDP growth at 4.7% in 2026 before improving to 5.0% in 2027, as higher energy costs and weaker global demand create additional pressure on consumption and investment.
Fiscal Discipline Remains a Key Strength
S&P identified Indonesia’s fiscal management as a major factor supporting its credit profile.
The agency noted the government’s continued commitment to maintaining the fiscal deficit below 3% of GDP, a policy anchor that has helped preserve investor confidence.
State revenues also showed improvement, rising 19% in the first five months of 2026 compared with the same period last year, driven by stronger tax administration, higher value-added tax collections, and increased contributions from natural resource royalties and dividends.
Reforms and Danantara Shape Long-Term Prospects
International institutions have highlighted the importance of structural reforms to strengthen Indonesia’s long-term growth potential.
S&P pointed to improvements in natural resource governance, including the establishment of PT Danantara Sumberdaya Indonesia (DSI), as a potential measure to improve transparency, strengthen commodity management, and increase state revenues.
The World Bank similarly emphasized that Indonesia’s medium-term growth outlook will depend on successful implementation of reforms, including accelerating investment, improving productivity, and reducing barriers to business expansion.
OECD also stressed the importance of improving public spending efficiency, strengthening energy resilience, and ensuring that state investment initiatives generate broader economic benefits.
Government Maintains Optimistic Growth Target
The Indonesian government remains more optimistic, projecting economic growth in 2026 within the range of 5.2% to 5.8%, with a midpoint target of 5.4% year-on-year.
Coordinating Minister for Economic Affairs Airlangga Hartarto said the S&P affirmation reflects international recognition of Indonesia’s consistent economic policy direction.
“The reaffirmation of Indonesia’s BBB rating with a Stable Outlook reflects confidence in the consistency and credibility of government policies,” Airlangga said.
The government said it will continue strengthening macroeconomic stability while accelerating economic transformation through industrial downstreaming, export management reforms, and productivity enhancement.
Indonesia Remains Resilient Amid Global Headwinds
The latest assessments from global institutions show a common message: Indonesia’s economy remains resilient, but future growth will depend on the success of structural reforms and the ability to navigate external shocks.
With its investment-grade status intact and growth expected to remain among the strongest in emerging Asia, Indonesia continues to attract attention from global investors seeking long-term opportunities in the region. (AT Network)
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