Indonesia's Economic Confidence Crisis

Indonesian President Prabowo Subianto>>>'s administration, which began in 2024, is facing a severe investor confidence crisis. His populist policies, including free school meals and undoing spending discipline, combined with unorthodox decisions like centralizing commodity exports under the Danantara sovereign fund and mandating new roles for the central bank, have rocked markets. The Indonesia — Indonesian rupiah>>> has plunged over 8% against the United States>>> to a record low, making it the world's worst-performing currency in 2026. Foreign investors have pulled $3.2 billion from stocks and reduced government bond ownership to a near 20-year low. Credit rating agencies like Moody s Ratings>>>, Fitch Ratings, and S&P Global Ratings>>> have issued negative outlooks, and MSCI>>> is reviewing Indonesia>>>'s equity status. This 'doom-loop' of outflows, currency depreciation, and policy uncertainty is threatening Indonesia>>>'s investment-grade credit rating and long-term growth prospects, exacerbated by external pressures from the global energy shock.