The increased demand of various industries in China will maintain the price, giving extra profits to Indonesia’s exporters and government. Now, it is only a matter of how economic authorities in Indonesia utilize this opportunity optimally.

After the holiday season is over, inflation usually goes down. However, this year, the situation might be different. There are several factors that can change the inflation pattern in the coming months.

The rupiah exchange rate is in danger of continuing to weaken because export dollars are parked abroad. Bank Indonesia issued a monetary operation instrument to strengthen the rupiah.

We cannot say with certainty to what extent this new criminal code will harm Indonesia’s competitiveness yet. However, there is definitely an additional negative mark in investors' checklist on Indonesia.

The Chinese government sent signals it will relax its pandemic management policies. Financial markets around the world breathed a sigh of relief at the signal.

Startups must be able to make adjustments to the dire situation. Now is the time to live like cockroaches and do everything to survive.

It seems that the capital owners who are hunting for profit through financial assets have different views about investing in Indonesia than those investors in the real sector who are so optimistic about doing business in Indonesia. 

High inflation pushes the Fed to keep raising interest rates, while rupiah is slowly slumping to the lowest point.

The market now can only anticipate that tighter monetary policy will worsen the drought of dollar liquidity around the world. US dollar liquidity in Indonesia’s financial market will also be affected.

The World Bank has warned The Fed's high-interest rates will be followed with similar policies by other central banks. These could trigger a global recession next year and damage economies of many countries.

The economy is increasingly recovering. Yet investors must be prepared for a number of risks that can reverse the condition.

There some good news about Indonesia’s economy because of the jump in various commodity prices in the global market. But their real effects are yet to come.

Bad memories from the 1970s are resurfacing. Then, the world economy fell into the chasm of stagflation: a decline in growth accompanied by high inflation. The current situation looks similar.

What is more seriously threatening the world economy now is the simmering energy crisis in Europe and China. When gas and coal prices are soaring, in the last week oil prices are following them as if refusing to be left behind.

Coal, despite its huge contribution to global warming, is once again becoming a prima donna. 

Investors are potentially facing double problems soon, which come from the United States and China. Be ready.

The key question is: would the additional ammunition from the IMF be enough to keep Indonesia’s financial market safe when the tapering shock arrives?

So even as the economy falls into ruin because of the pandemic, banks are still raking in profits. Meanwhile, the government is straining under its weight.

When the global market is in a rout, Indonesia’s Achilles heel lies in its government bonds market. The hardest shocks potentially start here. Foreign investor’s move to sell their Indonesian government bonds—“flight to safety” move—is the trigger.

The resolution of the government to put the brakes on 2022’s budget deficit brings relief to the market.

There is no point in chasing economic growth by prioritizing prestigious projects when ultimately, the economy cannot move because it does not have enough vaccine coverage.

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat

Contributor

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat (Contributor)

Yopie Hidayat

Contributor

Yopie Hidayat (Contributor)

Yopie Hidayat

(Contributor)

The lesson from Turkey is clear. Central bank’s independence is the anchor of market confidence. If Indonesia does not want to share the same fate as Turkey and lose its credibility, the government needs to immediately figure out, one way or another, how to reduce its budget deficit.