The global and national outlook indicates an increasingly complex and competitive geopolitical landscape. Indonesia stands at a critical juncture where it must maintain internal stability amidst political coalition fragmentation while carefully navigating the rapidly evolving global dynamics.

Burhanuddin Muhtadi, Executive Director of Indikator Politik Indonesia, stated during the DBS Asian Insight Conference 2025 held on Wednesday (May 22, 2025) in Senayan, Central Jakarta, that the global political outlook is trending toward multipolarity, while the domestic political situation remains relatively stable but still susceptible to friction.

Global Political Prospects: A World Increasingly Dominated by Multiple Powers

1. The world is moving towards multipolarity
   After two decades of US dominance following the Cold War (known as Pax Americana), new powers such as China and the BRICS alliance have emerged to challenge US hegemony. The US-China rivalry has intensified across technology, economic, and diplomatic sectors.

2. China rises as a global economic power
   Based on Purchasing Power Parity (PPP), China has surpassed the US as the world’s largest economy according to the IMF and World Bank. Nominally, China is projected to overtake the US by 2029, according to CEBR.

3. Protectionism and trade wars escalate
   Trump’s return to the White House has sparked escalations in the US-China trade war, increasing global uncertainty, driving inflation, and widening the US budget deficit.

4. Geopolitical conflicts continue to simmer
   Tensions in Ukraine, the Middle East, India-Pakistan, and the South China Sea raise risks of regional instability and disrupt global trade and supply chains.

Furthermore, DBS Bank Indonesia held the DBS Asian Insights Conference 2024 themed “Election to Action: Crafting A Sustainable Future Towards Golden Indonesia 2045 and ESG Excellence,” which drew several key conclusions, especially on political outlooks.

The conference concluded that the global political outlook will be influenced by various factors including economic uncertainty, energy transition, and fiscal policies of major countries.

Many nations still face challenges in maintaining economic stability, particularly in debt management and boosting investment post-elections. Indonesia, with a relatively low fiscal deficit, shows greater resilience compared to many other countries struggling with global economic pressures.

Sustainability is also a major focus of global political policies, with an increasing number of countries emphasizing energy transitions and the implementation of ESG (Environmental, Social, Governance) principles. Indonesia, for example, has established a Green Taxonomy as a new standard for the financial and industrial sectors to accelerate the shift toward a sustainable economy. DBS Bank Indonesia is actively supporting sustainable financial solutions as part of the long-term strategy toward Indonesia Emas 2045.

From a fiscal policy perspective, countries strive to maintain price stability and purchasing power through various economic strategies.

Political Prospects for Indonesia: Generally Stable but Vulnerable to Internal Frictions

1. Power consolidation through a broad coalition
   The Prabowo-Gibran administration is backed by a super-majority coalition. However, the potential for internal conflict within the coalition is high, especially ahead of the 2029 general elections.

2. Electoral system issues spark tensions
   Differing views among parties on open versus closed proportional representation and proposals to eliminate the presidential threshold could spark competition within the coalition.

3. Media tends to be tame, opposition weakened
   Only a small segment of civil society is critical. Although PDIP is formally outside the government, it still acts as a “government party.”

4. Challenges from the middle class
   The educated middle class shows signs of dissatisfaction (#IndonesiaGelap, #KaburAjaDulu). Experiences from countries like Chile and Bangladesh demonstrate that middle-class discontent can trigger serious political tensions.

To face these increasingly complex global and domestic challenges, Indonesia needs to implement several strategic recommendations to ensure sustainable national development.

First, maintaining political and internal security stability is the top priority to create a conducive climate for investment and development.

Second, the government must promote pro-business economic policies and enhance budget efficiency to ensure public resource use is targeted and highly effective. Globally, Indonesia should conduct balanced diplomacy by fostering good relations with all major powers without aligning too closely with any single bloc, including within the context of Indonesia’s involvement in BRICS.

Lastly, accelerating the process toward OECD membership is vital to strengthen Indonesia’s position in the global economic arena, while simultaneously maintaining strategic partnerships with the United States and Europe to balance perceptions of Indonesia’s geopolitical orientation.