Indonesia: Deficit set to widen – UOB
|UOB Global Economics & Markets Research economists Enrico Tanuwidjaja and Vincentius Ming Shen note that Indonesia’s current account moved back into a small deficit in 4Q25 and for full-year 2025. They highlight persistent services and primary income deficits, ongoing financial account pressures, and expect the current account deficit to widen to 1% of GDP in 2026 on higher imports.
Current account slips back into deficit
"Indonesia’s current account slipped back into a deficit of USD2.54bn (0.7% of GDP) in 4Q25, reversing the 3Q surplus, driven by services and primary income wider deficits. The full year deficit for FY25 stood at USD1.5bn or 0.1% of GDP, lower than 2024’s deficit of USD8.6bn (0.6% of GDP)."
"External risks remain, including U.S. tariffs and geopolitical tensions, but CEPA agreements and Danantara’s strategic investment might provide upside potential. We expect the current account deficit (CAD) to widen to 1% this year, driven by higher imports and sustained widening of the primary income deficit."
"Looking ahead, external pressures from geopolitical tensions and U.S. tariffs remain key risks. Indonesia’s Agreement on Reciprocal Trade with the U.S. (Feb 19) still poses uncertain outcomes while CEPA agreements with partners such as the EU, Canada, and South Korea provide trade diversification opportunities."
"Amid rising global uncertainty, the financial account may continue to face some pressure. Upside potential might come from Danantara as driver of domestic direct investment through its strategic project investments, with President Prabowo targeting total investment assets of around USD900bn."
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