Jakarta. Bank Indonesia Governor Perry Warjiyo said the recent shift in Indonesia’s sovereign outlook to negative by Moody’s Ratings does not signal weakening economic fundamentals, emphasizing that domestic growth, inflation, and financial stability remain solid despite heightened global uncertainty.

“Adjustment to the outlook is believed not to reflect a deterioration in Indonesia’s economic fundamentals,” Perry said, noting that the economy expanded 5.39% in the fourth quarter of 2025, bringing full-year growth to 5.1%, while inflation stayed contained at 2.92% within the central bank’s target range. He added that rupiah stability continues to be reinforced through Bank Indonesia’s strong policy commitment, alongside resilient banking liquidity, high capital buffers, and low credit risk.

Moody’s, which maintained Indonesia’s Baa2 sovereign rating while revising the outlook to negative, still projects economic growth to remain around 5% in the near to medium term, with fiscal deficits staying below 3% of GDP and monetary policy continuing to support price stability. The agency also expects government debt ratios to remain lower than similarly rated peers, although it highlighted the need to strengthen state revenue to sustain growth while preserving macroeconomic and financial stability.

Bank Indonesia said medium-term prospects remain favorable, forecasting 2026 growth at 4.9%–5.7%, supported by stronger domestic demand and the continued impact of coordinated government and central bank policies. Growth is projected to accelerate further in 2027 to 5.1%–5.9%, with inflation expected to remain under control.

External resilience also remains intact, the central bank said. Indonesia recorded a $2.51 billion trade surplus in December 2025, driven by both natural-resource and manufacturing exports. Foreign-exchange reserves rose to $156.5 billion at year-end, equivalent to 6.4 months of imports or 6.3 months of imports and government external debt payments, well above the international adequacy standard of about three months of imports.

Looking ahead, Bank Indonesia expects the current account deficit in 2026 to stay low at 0.1%–0.9% of GDP, while the rupiah is projected to remain stable with a strengthening bias, supported by attractive yields, low inflation, and solid growth prospects. Financial system stability is also seen holding firm on ample liquidity, strong bank capital, and contained credit risk.

The central bank said it will continue strengthening its policy mix to safeguard macroeconomic and financial stability while supporting sustainable growth, working closely with the Financial System Stability Committee and the government to enhance policy communication and maintain market confidence amid rising global uncertainty.