{"id":277154,"date":"2026-02-06T11:45:08","date_gmt":"2026-02-06T11:45:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/277154\/"},"modified":"2026-02-06T11:45:08","modified_gmt":"2026-02-06T11:45:08","slug":"moodys-warns-on-indonesia-outlook-in-wake-of-market-turmoil","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/277154\/","title":{"rendered":"Moody\u2019s warns on Indonesia outlook in wake of market turmoil"},"content":{"rendered":"

Unlock the Editor\u2019s Digest for free<\/p>\n

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/p>\n

Moody\u2019s has cut its credit rating outlook for Indonesia to \u201cnegative\u201d, citing policy uncertainty under President Prabowo Subianto, in the latest warning over south-east Asia\u2019s largest economy.<\/p>\n

The change from a \u201cstable\u201d outlook comes a week after global index provider MSCI said Indonesia could lose its emerging-market status over \u201cfundamental investability\u201d issues, triggering a rout in stocks<\/a>.<\/p>\n

Moody\u2019s flagged issues including policy uncertainty, weak governance, fiscal deterioration and ineffective government spending. It maintained its investment-grade Baa2 rating.<\/p>\n

\u201cThe outlook change is driven by reduced predictability in policymaking, which risks undermining policy effectiveness and points to weakening governance,\u201d Moody\u2019s said late on Thursday.<\/p>\n

\u201cIf sustained, the trend could erode Indonesia\u2019s long-established policy credibility, which has supported solid economic growth and macroeconomic, fiscal and financial stability.\u201d<\/p>\n

It also pointed to uncertainties regarding governance and the investment priorities of Indonesia<\/a>\u2019s new sovereign wealth fund, Danantara.<\/p>\n

The Jakarta Composite stock index fell 1.9 per cent on Friday after Moody\u2019s announcement, while the rupiah weakened 0.3 per cent against the dollar. Yields on 10-year Indonesian government bonds rose 0.1 percentage point to 6.41 per cent. Bond yields move inversely to prices.<\/p>\n

Doubts over Prabowo\u2019s economic and fiscal policies, aimed at an aggressive pursuit of an ambitious growth target, have increased since he took office in October 2024.<\/p>\n

Last year, he sacked finance minister Sri Mulyani Indrawati, who was known for her insistence on fiscal prudence, and replaced her with Purbaya Yudhi Sadewa, an economist who once called the IMF \u201cstupid\u201d<\/a>.<\/p>\n

Prabowo, a former military general, also appointed his nephew as one of the central bank\u2019s deputy governors, a move seen as steering the bank towards a pro-growth approach and away from rupiah strength.<\/p>\n

While Prabowo has set an ambitious plan to boost annual growth to 8 per cent from the current 5 per cent, economists said his policies so far did not align with that goal. The president has focused on spending policies<\/a> such as a free meals programme that is expected to cost $28bn a year.<\/p>\n

Recommended<\/p>\n

\"Prabowo<\/a><\/p>\n

Moody\u2019s said \u201cthe greater focus on using public spending to drive growth poses fiscal risks, particularly given Indonesia\u2019s weak revenue base\u201d.<\/p>\n

Responding to Moody\u2019s outlook change, Indonesia\u2019s co-ordinating minister for economic affairs Airlangga Hartarto said many rating agencies and global financial markets \u201chave yet to understand\u201d Prabowo\u2019s policy changes.<\/p>\n

\u201cOur state budget this year is somewhat different because we\u2019re spending more for the president\u2019s flagship programmes\u2009.\u2009.\u2009.\u2009but to drive economic growth through investment, we now have Danantara,\u201d he said. \u201cThat\u2019s what makes the difference.\u201d<\/p>\n

Additional reporting by William Sandlund in Hong Kong<\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this…\n","protected":false},"author":2,"featured_media":277155,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,184,85,46],"class_list":{"0":"post-277154","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-il","11":"tag-israel"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/277154","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=277154"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/277154\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/277155"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=277154"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=277154"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=277154"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}