Mirae Asset Warns of Growth Risks Despite Indonesia’s Stable Investment-Grade Rating

PT Mirae Asset Sekuritas Indonesia views S&P Global Ratings’ decision to affirm Indonesia’s sovereign credit rating at BBB with a stable outlook as a positive signal for the market. Nevertheless, investors should remain mindful of various macroeconomic challenges that continue to weigh on Indonesia’s growth prospects in the second half of 2026.

Rully Arya Wisnubroto, Head of Research and Chief Economist at PT Mirae Asset Sekuritas Indonesia, said S&P’s decision indicates that Indonesia’s fiscal fundamentals remain relatively sound, particularly with the state budget deficit ceiling being maintained at 3% of GDP as a fiscal policy anchor.

“S&P’s reaffirmation of Indonesia’s investment-grade rating provides confidence that the country’s fundamentals remain relatively strong. However, investors should also recognize that the challenges ahead arise not only from fiscal conditions, but also from external pressures and weakening domestic demand,” Rully said.

According to Rully, unlike S&P, which maintained a stable outlook, Fitch Ratings and Moody’s continue to assign Indonesia a negative outlook, citing policy uncertainty and elevated risks to the country’s fiscal position and external sector. However, Mirae Asset believes the primary risk at present is not a credit rating downgrade, but rather slower economic growth amid persistent external pressures.

“We believe S&P’s projection that economic growth could rise above 6% over the next few years remains fairly optimistic. Aggressive interest rate hikes, rupiah depreciation, higher inflation, and emerging signs of weaker domestic demand could constrain the pace of economic growth,” Rully said.

Rully added that the government’s capacity to provide fiscal stimulus is expected to remain limited due to its commitment to keeping the state budget deficit below 3% of GDP. Under these conditions, Mirae Asset continues to favor a defensive investment strategy, focusing on companies with strong fundamentals, healthy liquidity, and the ability to maintain profitability amid market volatility.

“We continue to view BBCA, EXCL, and JPFA as our top picks, given their relatively strong fundamentals and ability to withstand market uncertainty,” Rully said.

Meanwhile, Jessica Tasijawa, Fixed Income Analyst at PT Mirae Asset Sekuritas Indonesia, said that global financial markets continue to face pressure from renewed geopolitical risks in the Middle East.

According to Jessica, the rise in Brent crude oil prices to approximately US$83 per barrel could increase Indonesia’s energy import costs, widen the current account deficit, and sustain pressure on the rupiah.

“On the other hand, higher oil prices also increase the risk of global inflation, reinforcing expectations that interest rates will remain higher for longer. These conditions could sustain volatility in global financial markets in the coming period,” Jessica said.

Nevertheless, Jessica believes that S&P’s reaffirmation of Indonesia’s investment-grade status remains a positive factor that could support foreign investor interest in Indonesian government securities (SBN), particularly those with short- to medium-term maturities, provided that geopolitical conditions do not deteriorate significantly.