A barrage of warnings continues to erode market confidence
Fitch Ratings’ assessment adds to a growing list of early warnings previously voiced by MSCI, Goldman Sachs, UBS, and Moody’s Ratings. JAKARTA, KOMPAS — Signals of early warning against Indonesia’s economy have continued to emerge from various directions. The message is the same: major issues lie in governance quality, policy consistency, and regulatory direction. Without meaningful correction and improvement, the national economy is on the cusp of a crisis of confidence.
This time the early warning comes from Fitch Ratings, the international credit rating agency for organisations and sovereigns. Through an official announcement on Wednesday (4 March 2026), Fitch revised Indonesia’s credit outlook from stable to negative. Nevertheless, Fitch kept the credit rating at BBB, i.e., investment grade.
‘The outlook revision reflects rising policy uncertainty and the eroding consistency and credibility of Indonesia’s policy mix amid the increasingly centralised decision-making authority. The condition could weaken mid-term fiscal prospects, dampen investor sentiment, and pressurise the external buffer of the economy,’ Fitch said in a written statement.
Fitch’s assessment adds to the long list of early warnings previously voiced by several international agencies, from MSCI, Goldman Sachs, UBS to Moody’s Ratings. On 28 January 2026, MSCI froze the process of rebalancing Indonesia’s stock index.
The following day, Goldman Sachs and UBS said they lowered their recommendations for Indonesian stocks. By 5 February 2026, Moody’s lowered the Indonesia credit rating outlook from stable to negative. A day later, S&P also warned of fiscal pressures that could downgrade Indonesia’s credit rating.
With each organisation’s emphasises, these international institutions highlight major issues related to governance quality, policy consistency, and the direction of Indonesia’s economy’s regulation. These warnings serve as references for investors in placing their capital into Indonesia’s financial markets, immediately reflected in negative sentiment.
In the latest situation, Wednesday (4 March 2026), the rupiah, the stock market, and government bonds—the main domestic financial markets—were all under pressure. Using Jakarta Interbank Spot Dollar Rate (Jisdor) the rupiah closed at Rp 16,911 per US dollar, down 1.15% in 2026.
In the stock market, the Jakarta Composite Index (IHSG) closed at 7,577.06, down 13.39% year-to-date. Foreign investors posted net selling of Rp 6.24 trillion since the start of the year.
In the bond market, the 10-year government securities yield stood at 6.55%, up about 44 basis points from the start of the year. This rise came as foreign investors posted net selling of Rp 3.38 trillion in January-February 2026.
Telisa Aulia Falianty, Professor of Economics and Business at the University of Indonesia, argued that the stock market phenomenon is due to pressure from a hat-trick of negative sentiment weighing on the credibility of Indonesia’s market since the start of 2026.
According to her, the key notes from these international agencies are not about the economy, demographics, or fiscal strength, but about qualitative aspects. They focus more on institutional strength and governance, particularly regarding perceptions of policy unpredictability.
This escalation indicates a decline in international investment community confidence in the integrity of Indonesia’s economic governance. If not mitigated quickly, this risks increasing the cost of capital and the risk of default.
‘This escalation indicates a decline in international investment community confidence in the integrity of Indonesia’s economic governance. If not mitigated quickly, this risks increasing the cost of capital and the risk of default,’ she told reporters in Jakarta.
Therefore, the attention from these international organisations should be read as an early warning about policy governance, especially in fiscal and monetary lines. The government’s hope is to improve communication patterns to maintain market credibility.
On the other hand, global geopolitical escalation due to US and Israel’s attack on Iran worsens the situation. Rising oil prices together with rupiah depreciation will weigh on Indonesia’s financial sector amid threats of downgrades and credit prospect of various rating agencies.
Telisa estimates that the double pressure from geopolitical conditions and warnings from international agencies could push the 10-year government bond yield above 7% and drive the rupiah further down toward Rp 17,000 per US dollar.
According to her calculations, every Rp 100 weakening of the rupiah would widen the budget deficit by around Rp 800 billion. Moreover, every US$1 rise in oil price could widen the budget deficit by Rp 6.8 trillion.
‘Not only the downgrade in outlook by Fitch and Moody’s pushing up bond yields; the burden on the state budget will also rise if oil prices go up. Plus, our exchange rate is weakening against a strengthening US dollar. So, that triple hit is something we must anticipate,’ she said.
To mitigate these risks, she urged the government to focus on restoring confidence through reform of the stock market, strengthening the rule of law, and reallocating the budget to maintain inflation through fuel subsidies.
Separately contacted, Syafruddin Karimi, Professor at Andalas University’s Faculty of Economics and Business, argued that external shocks also raise the risk premium. As a result, the fiscal space is increasingly strained as SBN yields rise.
Additionally,