Indonesia sees sharp capital outflows as investors question fiscal direction

Investors are rapidly withdrawing funds from Indonesian stocks, driven by doubts over President Prabowo Subianto’s expansive social spending and growing interference in state institutions. MSCI flagged inadequate oversight of share trading and opaque ownership structures, threatening the nation’s place among emerging markets. Credit agencies Moody’s and Fitch have downgraded the outlook to negative, compounding pressure from higher U.S. rates and costly imports that weaken the rupiah.

Official data still show roughly five-percent economic growth, yet the benefits are not reaching households: the middle class has contracted by almost a fifth and youth unemployment sits near 17 percent. Personal stories illustrate the strain, with an IT graduate now earning about $220 a month delivering passengers on a motorcycle, and another job seeker turning to street-side grilled meat sales. Former trade minister Thomas Lembong warned that the accumulation of problems could push the economy toward a serious crisis, echoing memories of the 1998 financial collapse.