Indonesia's economy is poised for a cyclical rebound driven by expansionary macroeconomic policies, according to Standard Chartered's report by Aldian Taloputra. Fiscal policy is expected to play a larger role as the scope for further monetary easing diminishes. The report anticipates a 25bps rate cut by Bank Indonesia to 4.5% in Q1, while caution is advised regarding the Indonesian Rupiah due to fiscal risks and geopolitical concerns.

Economic outlook and fiscal policy changes

"Indonesia’s economy could see a cyclical rebound on expansionary macroeconomic policies. Fiscal policy is likely to take a greater role as room for further monetary easing narrows."

"Risk of removing the budget deficit cap has risen, on higher 2025 deficit and inclusion in parliament’s priority programme."

"We expect BI to maintain an accommodative stance, with a 25bps rate cut to 4.5% in Q1."

"We remain cautious on the IDR on fiscal risks and geopolitical concerns."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)