Arnoldus Kristianus, Muhammad Farhan, Jakarta – Indonesia is well-positioned to weather increasing global economic uncertainties and keep its financial system stable, according to Finance Minister Sri Mulyani Indrawati.
Speaking after the second quarterly meeting of the Financial System Stability Committee (KSSK), the former World Bank managing director said Indonesia remains resilient in the face of escalating trade tensions and tariff policies from the United States.
"Indonesia is projected to manage the adverse impacts of global uncertainty while preserving financial system stability and sustaining economic growth momentum," Sri Mulyani said Thursday in Jakarta.
The KSSK, which includes the Finance Ministry, Bank Indonesia, the Financial Services Authority (OJK), and the Deposit Insurance Corporation (LPS), concluded that financial system stability remained intact during the first quarter of 2025, despite intensifying global volatility.
Sri Mulyani cited reciprocal tariff policies from the US as the latest catalyst of market challenges, resulting in a shift by investors into safe-haven assets such as gold and government bonds in developed markets. Emerging markets, including Indonesia, have seen some currency pressure due to capital outflows.
Indonesia is facing a 32 percent export tariff on goods shipped to the US within the next three months, in addition to a 10 percent baseline tariff already in effect.
"While there is capital outflow pressure, Indonesia has maintained financial stability through coordinated policy responses. This shows our financial system is robust enough to withstand global shocks," she said.
To address these risks, the government is strengthening its domestic economic foundation through a mix of fiscal and monetary coordination, streamlining bureaucratic processes across ministries, and deploying a trade envoy led by Chief Economic Affairs Airlangga Hartarto to ease trade tensions with the US.
Sri Mulyani also addressed the International Monetary Fund's latest projection of 4.7 percent growth for Indonesia in 2025, below its previous projection of 5.1 percent and the government's 5.2 percent target. Still, she noted the downward revision is milder compared to other trade-dependent countries like Thailand, Vietnam, and the Philippines.
"Despite a 0.4 percent correction, our growth outlook is stronger than peers, and we expect the full-year figure to hover around 5 percent," she said.
She attributed this to solid household consumption, continued government spending, especially on pre-Eid benefits and social programs, and a rise in both public and private investment. Strategic infrastructure projects and strong manufacturing activity have also boosted investor confidence.Export performance, particularly in palm oil, steel, and electrical machinery, showed improvement in March 2025, helping to balance weaker commodity prices. Meanwhile, authorities are actively exploring new markets, including within ASEAN Plus 3, BRICS, and Europe, to counter the impact of US trade barriers.
Bank Indonesia has also been active in stabilizing the rupiah amid global uncertainty. The currency recently fell to its lowest level since the 1998 financial crisis, breaching Rp 16,900 on April 7. While the rupiah has since regained some ground, it continues to hover around the Rp 16,800 mark.
"Looking ahead, we expect the rupiah to remain stable, supported by competitive yields, low inflation, and positive growth prospects," Sri Mulyani added.
BI Governor Perry Warjiyo reaffirmed that monetary policy remains focused on exchange rate stability. He hinted at the potential for a rate cut later this year, provided inflation and exchange rate movements remain favorable. The current benchmark rate stands at 5.75 percent.
Despite the government's optimism, some economists have urged a shift in strategy.
Public policy expert Achmad Nur Hidayat from UPN Veteran Jakarta urged the government to adopt a more proactive economic approach, including import substitution for strategic sectors, selective and productivity-driven fiscal spending, targeted middle-class incentives, and reevaluation of underperforming infrastructure projects.
"Indonesia must embrace a bolder, adaptive economic strategy. We can't rely on old playbooks amid evolving global dynamics," Achmad said.
Senior economist at the Institute for Development of Economics and Finance (Indef), Mohamad Fadhil Hasan warned that the US economy, which is expected to grow by just 1 percent, could directly affect Indonesia's economy, potentially reducing its growth by 0.2 percent to 0.4 percent.