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Societe Generale analysts Kunal Kundu and Galvin Chia highlight that Indonesia's fiscal health is deteriorating ahead of 2026 due to front-loaded government spending, which has pushed the primary budget balance into deficit. This fiscal slippage is increasing the country's financing requirements, raising concerns about debt sustainability and economic stability. The analysts emphasize that the early fiscal challenges could undermine investor confidence and pressure the Indonesian rupiah. For global markets, this development may affect regional trade dynamics and capital flows, particularly in emerging Asia. Traders should monitor Indonesia's fiscal policy adjustments and potential central bank interventions to mitigate currency volatility. The bearish outlook could also influence broader Southeast Asian markets, especially if fiscal mismanagement leads to contagion risks.
