S&P Affirms Stable Outlook, Prasasti Urges Predictable Policy

The Prasasti Center for Policy Studies has urged the government to design more predictable and consistent policies following S&P Global Ratings’ decision to maintain Indonesia’s sovereign credit rating. S&P kept the long-term rating at BBB and the short-term rating at A-2 with a stable outlook.

Prasasti Research Director Adhi Nugroho Saputro stated that the maintained credit rating does not mean all economic problems are resolved, just as weakening indicators do not automatically signal a crisis. “The maintained rating does not mean the problems are over, and weakening indicators do not automatically mean a crisis. We are facing a combination of both. The public needs to get used to reading figures holistically, because from a complete reading, the right policy response can emerge,” he said.

According to Prasasti, the credit rating affirmation comes amid various signals of pressure on the economy. Statistics Indonesia (BPS) recorded a trade deficit of 1.61 billion US dollars in May 2026, the first deficit since April 2020. Meanwhile, Indonesia’s Manufacturing Purchasing Managers’ Index (PMI) contracted to 46.9 in June 2026, and inflation rose to 3.34 percent.

On the other hand, several fundamental indicators still show resilience. The Indonesian economy grew by 5.61 percent year-on-year in the first quarter of 2026, the highest for a first-quarter period since 2013. The cumulative trade balance for January-May 2026 still recorded a surplus of 4.03 billion US dollars, while foreign exchange reserves in June reached 145.6 billion US dollars, equivalent to 5.5 months of imports. Inflation also remains within Bank Indonesia’s target range of 2.5 percent plus or minus one percent.

Adhi views that this situation needs to be read comprehensively so that the public can distinguish short-term pressures from fundamental economic weakening. “S&P’s notes are quite open. What matters is not just the content of the policy, but how predictable its direction is and how consistent its implementation is. This is doable work, and the results will be quickly read by the market,” Adhi explained.

Prasasti assesses that the trade deficit in May 2026 needs to be understood more deeply. Based on BPS data, the deficit was mainly caused by the oil and gas sector, which recorded a deficit of 3.76 billion US dollars due to rising global energy prices. Outside of oil and gas, trade still booked a surplus of 2.15 billion US dollars. Thus, the trade deficit in May reflects pressure from rising imported energy prices rather than an overall weakening of export competitiveness.

Policy and Program Director of Prasasti, Piter Abdullah, also assessed that the rise in inflation is more influenced by supply-side and seasonal factors. “If we dissect it, the character of our inflation is more driven by the supply side and seasonal factors, not because of surging domestic demand. Our core inflation remains low. So, the price pressures that appear are temporary, not structural,” Piter explained.

Regarding the rupiah exchange rate, Piter assessed that the pressure originates from various factors and cannot be overcome solely through monetary policy. “The source of pressure on the rupiah comes more from non-monetary factors, both from the global side which is still full of uncertainty and from the domestic side, especially fiscal management which is in the spotlight of rating agencies. When the government is able to convince investors that fiscal risks are managed well and transparently, the pressure on the rupiah will decrease,” he said.