Prabowo Encourages Positive Sentiment, US Tariffs Become Fresh Winds For The Indonesian Economy

President Prabowo Subianto/PHOTO via Instagram @prabowo

JAKARTA - President Prabowo Subianto's government is considered to have brought positive sentiment to the national economic recovery, along with a number of external factors and domestic policies that support growth.

In a research entitled 'Indonesia's Macro Tailwinds Are Here' released on July 17, 2025, Trimegah Sekuritas said the decline in the US (US) export rate against Indonesia was 19 percent from the previous 32 percent as one of the important catalysts for exports and market sentiment.

"The US sets a lower rate than expected, encouraging market exports and sentiment. Bank Indonesia has also finally cut interest rates. Plus stable rupiah and early signs of government spending which began to increase since June, all of which became a strong foundation," Trimegah wrote in a report dated July 17, 2025, reported by ANTARA.

In addition, Bank Indonesia has also cut the benchmark interest rate (BI Rate), supported by the stability of the rupiah exchange rate and increased government spending which began to be seen since June 2025.

Trimegah also noted the government's readiness to increase the Free Nutrition Food (MBG) program in August as an important catalyst that could strengthen domestic demand.

It was also emphasized that fiscal spending began to show movement since June, becoming the starting signal of the government's real support for the people's economy.

"If this momentum continues to develop in the next few months, this could be a further push that eventually ignites the fire under domestic demand," Trimegah wrote.

Although foreign investors are still cautious at this time, with the outflow approaching Rp1 trillion, Trimegah assesses that domestic investors, both retailers and institutions, are now the backbone of the Indonesian stock market.

Trimegah also conveyed a valuation scenario and a potential increase in the Composite Stock Price Index (JCI). In a realistic scenario, 0-2 percent profit growth can bring the index to the level of 7,750, with an upside potential of around 10 percent. While in the worst case scenario, the risk of decrease is considered limited.

"With the valuation still below -2 standard deviation (PE 11x), and dividend yields that compete with government bonds, the Indonesian stock market looks cheap. The macro wind has blown. Now there is only one question: can the profit, and investor confidence follow? " concluded Trimegah's report.

Meanwhile, the President of the Republic of Indonesia, Prabowo Subianto, stated that in every international trade negotiations, protection of national workers is the government's top priority.

"Everything we have calculated, we all negotiate, we also think that what is important for me is my people. The important thing is that I have to protect our workers," Prabowo said at Halim Perdanakusuma Air Base, Jakarta, Wednesday (16/7), after a visit abroad.

The President emphasized that Indonesia is still open to economic cooperation, but still maintains national boundaries and interests.

"This is our offer, we are unable to give more," he said.

Prabowo also expressed optimism for the national economic condition which is said to be in a strong and stable position.

Previously, US President Donald Trump announced a reduction in import rates on Indonesian products from 32 percent to 19 percent, after a bilateral meeting with President Prabowo.

The agreement also includes US$15 billion in energy purchase commitments, US$4.5 billion in agricultural products, and the purchase of 50 Boeing aircraft by Indonesia.