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Indonesia’s authorities continue to undertake supportive measures to boost stock market transparency, while actively engaging with the index provider MSCI. Besides large scale leadership reshuffle in the securities regulator OJK and departure of the IDX CEO since late last week, other changes have included an increase in the minimum free float level (our note), assurances of more detailed and timely ownership data, regular updates and dialogue with the MSCI/market participants, efforts to broaden institutional involvement via higher participation of pension & insurance funds as well as the state investment agency in the equity market and acceleration of demutualisation of the stock exchange. While few of these will take time to be rolled out, our view is that a concrete roadmap and meaningful progress of near- and medium-term changes would help to meet the index provider’s requirements ahead of the May 2026 deadline. Separately, the finance minister reiterated the economy’s stable macro prospects, promising to keep risks in check, including respecting the red line on the fiscal deficit and assurances on central bank independence and currency stability.
4Q GDP growth, due on Thursday, is likely to wrap up the year on a slightly firmer note at 5.1% yoy, taking annual 2025 growth to 5%, in line with our forecast (see preview). Separately, data out earlier in the week saw January CPI inflation tick up to nearly a three-year high at 3.6% yoy from average 1.9% yoy in 2025, driven up by base effects (electricity tariffs were cut same time last year). Passage of base effects is expected to normalise inflation 2Q onwards. Beating expectations, Dec exports rose 11.6% yoy, owing to larger shipments of palm oil, nickel, and other electric components. Imports rose 10.8%, leaving a reasonable trade surplus at $2.5bn in December. Annual 2025 goods exports registered 6% yoy rise, characterised by a firmer 1H and softer 2H due to the passage of frontloaded demand, outpacing imports at 2.8%. Full-year trade surplus jumped by a third to $41bn. China remained the largest export destination, with a share of 24% helped by higher sales of iron & steel, mineral fuels and nickel, followed by the US (11.5% share) notwithstanding higher tariffs, India (6.8%), ASEAN (19%) and EU (7.2%). China remained the main source of imports as well, ahead of Japan and the US. Purchases of the heavyweight intermediate goods was largely flat on the year, while capital goods witnessed a strong upturn. 4Q25 current account balance is likely to return to a modest deficit over a narrower goods trade surplus. While the current gap will be contained to below -0.5% of GDP, capital flows will fall short of financing needs, pushing the full year balance of payments in red for the first time in six years. BI is likely to extend its pause on rates this month, in a bid to safeguard rate sensitive flows and keep currency weakness in check. 
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