Jakarta. BNI Sekuritas, the subsidiary of the state-owned bank BNI, recently released its 2025 outlook for the Indonesian capital market.

According to BNI Sekuritas, Indonesia will take a step further towards the post-Covid recovery this year. However, the global economic growth is still weaker compared to pre-pandemic levels.

Erwan Teguh, the SEVP for research at BNI Sekuritas, said that although there was still a slim chance for US recession, its risks tend to increase. As US President-Elect Donald Trump gets closer to his inauguration, the possibility of the businessman-turned-politician launching controversial policies once he takes office grows. This is expected to take a toll on global growth if Trump really proceeds with these policies.

ASEAN, however, is estimated to perform better amidst this uncertainty.

Indonesia, with an economy that relies more on domestic consumption and proven resilience, can be a safer place, even within the ASEAN region. Indonesia’s new government, backed by the largest coalition in parliamentary history, is expected to accelerate reforms, provide clearer policy direction, and ensure policies are better implemented, according to BNI Sekuritas.

Indonesia is expected to enjoy a stable growth in 2025 -- something that BNI Sekuritas attributes to stability-driven policies, investment, domestic consumption, and social programs. Indonesia will also likely avoid large-scale fiscal expansion. But there are challenges ahead. Indonesia still has to deal with commodity price fluctuations and the slower growth of its largest trading partner China.

There is also a likelihood for Indonesia's consumer market to witness a robust growth. However, this will only take place if the government strengthens its fiscal stimulus measures, which can eventually propel consumption.

Indonesia’s nickel sector remains a key sector, although commodity price volatility and the debate over renewable energy could affect the demand outlook. Global interest rate cuts and stimulus from China provide positive impetus, but geopolitical tensions, especially in the Asia-Pacific region, as well as ongoing conflicts in Ukraine and Gaza, could add risks to trade flows and investor sentiment.

Indonesian Market Valuation and Key Sectors

Based on the price-to-earning (P/E) ratio and the price-to-book value (PBV), Indonesia's market valuation remains attractive compared to similar countries in the Asian region and bond yields.

Most sectors, including telecommunications, consumer goods, and financial, are below their historical average. Growth is expected to be driven by the consumer goods, healthcare, and financial sectors. The commodity sector remains quite lackluster. The bottom-up Jakarta Composite Index (JCI) target is estimated to stand around 8,200, with a bearish and bullish case range of 7,200 to 8,950. The potential increase reaches 24 percent.

"With stable growth projections and attractive investment opportunities in these sectors, Indonesia shows solid potential in facing the existing global economic challenges," Erwan said.

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