Indonesia Faces Uncertainty on Multiple Fronts; Economist Identifies the Main Causes
Jakarta, CNBC Indonesia – Indonesia is facing uncertainty from several directions, including shifts in global economic power, developments in artificial intelligence (AI), oil price volatility and rising government bond yields.
Senior economist and CReco Research Institute founder Raden Pardede said current global pressures stem not only from economic and geopolitical competition, but also from technological and demographic changes that are fuelling social unrest in some countries.
The United States is no longer the world’s sole economic power, Raden said. The emergence of new powers such as China has reshaped the global economic landscape and added to uncertainty.
At the same time, advances in AI and demographic change are creating new pressures. One indication, he said, is growing discontent among young people in several European countries.
“Young people, or Gen Z, feel that the burden has become very heavy because they have to support their parents. There are more and more older people in European countries now. So, alongside AI and geopolitical changes, young people feel that things are becoming increasingly difficult,” Raden said on CNBC Indonesia’s Cuap Cuap Cuan programme, as quoted on Monday (9 November 2026).
He explained that young people in those countries were beginning to question the fiscal burdens they had to bear, including government debt inherited from previous generations. The discontent has also contributed to waves of protests in several European countries, including France and Germany.
“All the government’s obligations and government debt were created by previous generations. Why should we have to bear them now? Why are teachers being cut? Why are facilities for young people being reduced? That is why protests are happening there, as we have seen in France and Germany,” he added.
These global pressures are also affecting Indonesia, including through a rise in global crude oil prices, which at one point exceeded US$100 per barrel. That is far above the Indonesian Crude Price (ICP) assumption of US$70 per barrel in the 2026 state budget (APBN).
Higher oil prices could place additional pressure on the state budget, particularly by increasing energy expenditure and subsidy needs.
Rising interest rates in several countries are another source of uncertainty. Raden cited interest rate developments in the United States, Germany, France and Japan, which also affect global financial markets.
As a result, yields on Indonesia’s 10-year government bonds (SBN) have also risen, reaching 7.8%. This is higher than the 6.9% assumption in the 2026 state budget.
Domestically, uncertainty has also arisen from changes in government, including differences in leadership styles and policy priorities between successive administrations.
The combination of global and domestic pressures could mean that economic uncertainty persists for longer.
“This is what makes it look as though we are in a ‘higher for longer’ situation. It seems this uncertainty will last quite a long time,” he said.