Economist: Easing inflation makes second half a momentum to maintain balance

The biggest challenge for Indonesia in the second half of the year is not solely about inflation, but maintaining external stability amid a weakening trade surplus and increasing global uncertainty, according to Fakhrul Fulvian, Chief Economist of Trimegah Sekuritas Indonesia. He assessed that the second half of 2026 is a momentum to maintain national balance after inflationary pressures eased in July 2026. Statistics Indonesia (BPS) reported that annual inflation fell to 2.88 percent in July 2026 from 3.34 percent in June 2026. “The second half of 2026 is a period of maintaining balance. On one hand, we are beginning to see a recovery in domestic economic activity, but on the other hand, we must ensure Indonesia remains a competitive portfolio investment destination amidst global uncertainty,” Fakhrul said in Jakarta on Monday. Generally, Fakhrul opined that Indonesia’s biggest challenge in the second half of the year is not just about inflation, but maintaining external stability amid a weakening trade surplus and rising global uncertainty. “Lower inflation provides better room for people’s purchasing power and economic stability. However, we cannot ignore the fact that the trade balance has experienced deficits for two consecutive months, so pressure on the current account and the Balance of Payments still needs to be anticipated,” he explained. He estimated that the current account deficit in the second quarter of 2026 reached around USD 7.7 billion, or about 2.1 percent of gross domestic product (GDP), while the overall Balance of Payments is still expected to experience a deficit of around USD 2.6 billion. This condition indicates that external financing remains a very important factor in maintaining rupiah exchange rate stability. According to Fakhrul, Indonesia needs to maintain the attractiveness of its domestic financial market for global investors. In the second half of 2026, Indonesia is still expected to require foreign capital inflows of around USD 11 billion into the government bond market to maintain rupiah stability and external balance. On the other hand, Fakhrul reminded that external risks remain considerable. Global markets are still observing the possibility of a tighter stance from the Federal Reserve if inflationary pressures in the United States rise again. Nevertheless, Fakhrul assessed that domestic fundamentals still provide room for optimism. Easing food price pressures, improving manufacturing activity, and rising business confidence are positive capital entering the second half of the year. “Rupiah exchange rate stability will ultimately be determined by our ability to maintain investor confidence, both through fiscal and monetary coordination and consistent policy communication,” he said.