Do Not Be Lulled by the False Calm of the Global Economy

The global economy is displaying an interesting yet misleading paradox. On the surface, financial markets appear increasingly calm. Oil prices are trending downwards, inflation shows a tendency to ease, and the escalation of conflict in the Middle East is no longer as intense as it was a few months ago. It seems as though the world is moving towards a recovery phase. However, behind this calm, three international economic institutions—S&P Global Ratings, the International Monetary Fund (IMF), and the World Bank—are conveying the same message with different diction. S&P uses the term Fragile Relief, the IMF describes the global economy as being in ‘Crosscurrents of War and Technology’, while the World Bank states the world is facing ‘another major shock’ that is suppressing global growth prospects to their lowest point since the Covid-19 pandemic. Their difference lies only in the choice of words, but the substance is identical: global risk is not over, but is changing form. I see these three reports not as three independent narratives, but as one large mosaic explaining a new phase of the world economy. This phase is what I call Fragile Relief Syndrome. Fragile Relief Syndrome is a condition where economic indicators appear to be improving, while the sources of uncertainty are actually becoming more complex. This is the biggest trap in reading the current global economy. Investors are optimistic again. Governments are beginning to feel that pressure has eased. Central banks are gaining more room to act in organising their monetary policies. But behind this optimism, the foundation of risk is actually widening. Risk does not disappear; it merely changes face. The energy crisis is shifting into a productivity crisis. Inflationary pressures are turning into competition for technological mastery. Military conflict is evolving into a supply chain war, a data war, and a race to master artificial intelligence. Therefore, I do not interpret fragile relief as the beginning of a global economic recovery. On the contrary, I see it as a transition phase towards a new geo-economic order that is far more complex than the previous era. For nearly five decades, the world’s economic cycle was relatively easy to understand. When oil prices rose, inflation increased. When inflation increased, central banks raised interest rates. When interest rates rose, economic growth slowed. Now, that pattern is beginning to lose its relevance. The S&P report shows that global economic resilience is increasingly dependent on technology investment and market confidence. The IMF even assesses that the development of Artificial Intelligence (AI) has become a counterbalance to the negative impacts of geopolitical conflict. Meanwhile, the World Bank estimates that if developing countries can adopt AI widely, the 2030s could potentially be the period with the greatest surge in productivity since the 1970s. The message is very clear. The engine of world economic growth has shifted. It is no longer oil. No longer coal. No longer iron ore. It is data, algorithms, semiconductors, cloud computing, and artificial intelligence. In other words, the world is undergoing a transformation from a commodity cycle to a technology cycle. Amidst these changes, Indonesia’s position is actually relatively strong. National economic growth still reached 5.61% in the first quarter of 2026, inflation is in the range of 3.48%, financial system stability is maintained, while the state budget deficit of Rp240.1 trillion, or about 0.93% of GDP, is still within healthy limits. The World Bank also maintains its growth projection for Indonesia at around 5.0% in 2026, increasing to 5.2% in 2027, making Indonesia one of the most stable large economies amidst the global economic slowdown. This projection is precisely where the biggest challenge lies. For too long, we have measured the success of development by the size of economic growth figures. Yet, the true measure is not growth, but productivity. Growth can be driven by commodity price cycles, but productivity is only born from innovation. The downstreaming policy is a strategic step that deserves appreciation. However, downstreaming is not the final goal of economic development. Downstreaming is merely an entry point to industrial transformation. Developed countries did not become rich by selling nickel. They became rich by mastering the technology that utilises nickel. The greatest added value does not come from mining activities, but from the ability to generate innovation, technology, and high-value products. Therefore, Indonesia’s development agenda must immediately move from a resource-based economy towards an innovation-driven economy. From this perspective, fiscal reform enters a new chapter. This is oriented towards what the World Bank conveyed, which warned that many commodity-rich countries failed to capitalise on price boom periods because additional state revenue was mostly used to enlarge routine spending. When commodity prices fall, fiscal space narrows and the government’s ability to drive growth weakens. Indonesia must not repeat this cycle. The state budget is no longer sufficient if positioned merely as an instrument for distribution, including asset redistribution and economic stabilisation. The state budget must transform into a national productivity engine. State spending must be directed towards strengthening research, developing the Artificial Intelligence ecosystem, building a national data centre, and accelerating industrial digitalisation.