EXCLUSIVE INTERVIEW | Shan Saeed explains why fiscal discipline, structural reform and policy continuity place Indonesia among Asia’s most resilient emerging economies.
By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Jan 19 — Indonesia enters 2026 with a macroeconomic profile increasingly defined by stability, fiscal discipline and structural momentum, rather than cyclical volatility, according to Shan Saeed, Chief Economist at IQI Global.
In an exclusive interview with TNS News, Saeed said Indonesia’s economic growth is expected to remain firmly within the 5–6% range, positioning the country among the most resilient large emerging markets globally. Nominal GDP is projected to approach US$1.4 trillion in 2026, while public debt is expected to decline further toward the upper-30% range of GDP, underscoring prudent fiscal management and a strengthening sovereign macroeconomic balance sheet.
Macro Strength Anchored in Discipline
Based on prevailing trends and current policy settings, Saeed noted that Indonesia enters the coming year with stronger buffers than in past cycles, including contained public debt, improving fiscal flexibility and a predominantly domestic-demand-driven growth model. These factors provide meaningful insulation against external shocks amid an uneven global financial environment.
Rather than relying on short-term stimulus, Indonesia’s growth trajectory reflects a gradual upgrade in economic quality, supported by structural reforms and institutional credibility.
External Fundamentals and Investment Flows
External fundamentals remain supportive. Export performance is projected to stay robust, with total exports expected to reach approximately US$250 billion, driven by commodities, downstream processing and rising value-added capacity across manufacturing and resource-based industries.
Foreign direct investment inflows are anticipated to exceed US$30 billion, channelled primarily into infrastructure, digital technology, renewable energy and industrial capacity expansion. Collectively, these flows reinforce Indonesia’s role as a central economic anchor within ASEAN and enhance its attractiveness to long-term global capital.
Policy Continuity Under President Prabowo
At the institutional level, Indonesia’s macroeconomic framework reflects policy continuity, fiscal discipline and coordinated economic governance under the administration of Prabowo Subianto.
Shan observed that maintaining sovereign macroeconomic stability and policy coherence has remained a central priority of the government. The emphasis on macro-stability, improving the investment climate, advancing downstream industrial development and ensuring coordination across fiscal and monetary institutions has contributed to a more predictable and credible operating environment.
This approach, he said, supports a transition toward higher-quality growth anchored in structural reforms, rather than growth driven by short-term policy intervention.
Human Capital as a Structural Multiplier
Beyond headline macro indicators, human capital development is emerging as an increasingly important driver of Indonesia’s medium-term growth outlook. Rising female labour-force participation, sustained investment in female education and broader human-capital enhancement are becoming structural multipliers with long-term implications for productivity, income resilience and social mobility.
These trends strengthen Indonesia’s growth potential while contributing to more inclusive economic outcomes.
Risks, but Stronger Buffers
Shan cautioned that risks remain part of the outlook. Global financial conditions could tighten unevenly, commodity price cycles may introduce episodic volatility and the execution of large-scale investments will require continued institutional discipline.
However, Indonesia’s strengthened macro buffers including contained public debt, improving fiscal flexibility and a domestic-demand-led growth model place the economy in a far stronger position than in previous cycles.
Measured Strength, Not Exuberance
Taken together, Indonesia’s 2026 outlook points to measured strength rather than exuberance. The combination of macro stability, institutional credibility, structural reform and demographic momentum suggests the economy is not merely sustaining growth, but progressively upgrading the quality of that growth.
For investors, policymakers and regional partners, Shan said Indonesia increasingly represents a core emerging-market allocation, anchored in sovereign macroeconomic stability and oriented toward long-term value creation. – TNS NEWS