JAKARTA – Goldman Sachs Group Inc., the multinational investment bank and financial services company from the United States (US), has downgraded Indonesia’s stocks and bonds (with 10-20 year tenors) issued by the government of the Republic of Indonesia (RI).

Indonesia’s stock rating has been lowered to market weight from overweight, while the country’s bond rating has been adjusted to neutral.

The bank, with Assets Under Management (AUM) of USD 3.14 trillion, adjusted Indonesia’s stock and bond ratings due to rising fiscal risks, particularly after policies such as the reduction of government expenditure and a stimulus programme for affordable housing for low-income households.

Goldman Sachs projects Indonesia’s budget deficit to rise to 2.9% of Gross Domestic Product (GDP) in 2025. Previously, the budget deficit was estimated to reach 2.5% of GDP.

Meanwhile, Indonesia’s capital markets are still facing uncertainty amidst rising tensions between the US and several trading partners, including China and Canada. Several analysts are also concerned that Indonesia’s domestic economy is likely to weaken in this situation.

Indonesia Stock Exchange (IDX) recorded that Jakarta Composite Index (JCI) has fallen by more than 14% from its peak in September 2024. Meanwhile, the rupiah exchange rate against the US dollar hit its lowest level in five years in mid-February 2025. (KR/ZH)