Jakarta, 21 November 2024 – PT Mandiri Sekuritas (Mandiri Sekuritas/The Company) projects Indonesia’s Gross Domestic Product (GDP) to be at stable growth of around 5.1% in 2025. This growth is mainly supported by improved domestic demand or household consumption, export performance affected by the global economic slowdown, and potential higher U.S. import tariffs on goods from China and other countries.
Rangga Cipta, Chief Economist of Mandiri Sekuritas said, “We project that household consumption will recover, capital cycle will resume, supported by domestic and foreign direct investment, which will be the main drivers of Indonesia’s economic growth in 2025. Meanwhile, inflation is projected at average of 2.6% in 2025, up from 2.3% this year. The increase of inflation is partly due to low base effect of weak core inflation and higher Value-added Tax (VAT) rate of 12% next year.”
“The Rupiah exchange rate in 2025 is projected to be at average of 15,700 per US dollar, reflecting a slight appreciation from 2024. The limited room for Rupiah appreciation reflects the strength of the US dollar supported by Trump’s inflationary policies, but remains protective both fiscally and in international trade,” explained Rangga.
Meanwhile, on the equity market front, Adrian Joezer, Head of Equity Market Analyst and Strategy at Mandiri Sekuritas, said, “Facing continued increasing global and domestic uncertainties, Indonesia equity market is expected to experience a ‘Waiting Game,’ awaiting for more certainties. The Jakarta Composite Index (JCI) faces bottom-up strategic pressures, and in such conditions, it is crucial for investors to focus on sectors as we enter 2025. We encourage investors to concentrate on areas where capital turnover is expected to rise, in line with increasing funding needs under tight liquidity conditions. High volatility may persist until greater certainty emerges."
“We project the JCI to reach 8,150 by the end of 2025, with a range of 8,590/7,140. Preferred sectors are consumption, food, property, telecommunications, transportation, and retail in Q1 2025. And in Q2 2025, banking, automotive, and retail sectors are expected to gain traction,” Adrian added.
For the bond market, Handy Yunianto, Head of Fixed Income Analyst at Mandiri Sekuritas, commented, “We believe that bond market will continue to have positive returns in both 2024 and 2025, supported by several catalysts. First, there is room for further cuts in the Bank Indonesia (BI) rate with relatively low inflation pressures and expectations that the Fed interest rate will continue to decrease in 2025. Second, SBN supply pressures is also still manageable since the government can still use excess budges balances to optimize loan, and investment financing, smooth transition to the new government. Lastly, valuation remains quite attractive compared to yields offered by peer emerging markets with the same credit ratings.”
“Meanwhile, from risk perspective, global factors will still play a significant role, such as the U.S election results and escalating geopolitical conflicts. Trump’s fiscal policies, such as tax cuts and higher tariffs on imported goods and services is projected to affect inflation increases and slowing expectations on the Fed Funds Rate cuts. However, there is an interesting development in Indonesian bond market where the correlation between U.S. Treasury yields and Indonesian government bond yields is weakening due to the growing dominance of domestic investors for both institutional and retail who have become the biggest buyers of the government bonds this year,” Handy explained.
