The global tariff war tensions have started to ease, although market participants remain cautious about its potential impact on Indonesia's economic growth and stock market performance.

Samuel Kesuma, Chief Investment Officer – Equity at PT Manulife Aset Manajemen Indonesia (MAMI), explained that the previous trade tariff conflicts between the United States (US) and its trading partners had pressured global growth projections.

Leading international institutions such as the Organisation for Economic Co-operation and Development (OECD), International Monetary Fund (IMF), and World Bank have all revised their global economic growth forecasts downward.

“If these high tariffs persist for a prolonged period, the risks of stagflation, economic stagnation, or even recession could increase,” said Samuel in an official statement quoted Friday (May 23, 2025).

Nevertheless, Samuel noted that the direction of the tariff conflict is beginning to show more positive signs.

The US has reportedly resumed trade negotiations with several of its partners, and even reached an agreement with the United Kingdom.

This development has had a favorable effect on global financial markets, including Indonesia.

According to him, foreign investor sell-off pressure in the domestic equity market has begun to subside. The Indonesian rupiah exchange rate is also showing signs of stabilization.

The rupiah is currently trending stable after previously being pressured by global uncertainties.

On the domestic front, Samuel noted that market players are closely watching Bank Indonesia’s next monetary policy decision, particularly regarding a possible cut in the benchmark interest rate.

“Since late 2022, Indonesia has experienced a high-interest-rate environment. A rate cut would support liquidity and be a key factor in driving economic recovery,” he said.

Furthermore, government spending is viewed as another crucial catalyst. Amid the global economic slowdown, faster execution of state spending is expected to help sustain the momentum of Indonesia’s still-weak economic growth.

“Government expenditure can act as an economic cushion, helping to revitalize the national economic engine,” Samuel emphasized.

He also stressed the importance of continued global trade tariff negotiations. Greater policy certainty in international trade is believed to foster positive sentiment and reduce market uncertainty.

Samuel further noted that Indonesia's stock market valuation remains attractive for long-term investors. However, he underlined the importance of portfolio diversification and risk management, given the current high level of market volatility.

“Market sentiment can shift suddenly due to both domestic and global factors. Therefore, it's vital to remain vigilant and maintain a balanced investment portfolio,” he concluded.