Indonesia faces investor exodus after Hormuz closure and spending concerns
9 reported1 unconfirmed
A single-source report from DW describes a sudden flight of foreign investors from Indonesia, triggered by the closure of the Strait of Hormuz and concerns over President Prabowo Subianto’s spending plans. The article states that since the pandemic, Indonesia had delivered steady annual growth of 5%, but the closure of the strait caused fuel subsidy costs to rocket, with Reuters reporting policymakers needed an extra $6 billion or more to keep prices stable. The rupiah plunged 8% to record lows near 18,000 to the dollar, and the Jakarta stock market fell by a third, becoming the worst-performing stock market this year. The Financial Times calculated that global funds sold a net $3.9 billion worth of stocks this year, the largest sell-off since just before the 1997-98 Asian Financial Crisis. The article attributes the sell-off to a surge in energy costs colliding with Prabowo’s campaign promises to raise economic growth to 8% through trillions of rupiah in spending on housing, education, and health. Ratings agencies Moody’s and Fitch cut Indonesia’s outlook to negative earlier this year, and S&P Global Ratings warned on July 9, 2026, that it may also announce a downgrade due to transparency issues. The article notes that Indonesia’s debt-to-GDP ratio is 40.75%, but local media reported that close to a quarter of all tax receipts in 2026 would go toward interest payments, more than double the ratio recommended by the International Monetary Fund.
What’s reported
Indonesia had steady annual growth of 5% since the pandemic before the Strait of Hormuz closure.
Fuel subsidy costs rocketed after the closure; Reuters reported policymakers needed an extra $6 billion or more to keep prices stable.
The rupiah plunged 8% to record lows near 18,000 to the dollar.
The Jakarta stock market fell by a third, becoming the worst-performing stock market this year.
The Financial Times calculated global funds sold a net $3.9 billion worth of stocks this year, the largest sell-off since just before the 1997-98 Asian Financial Crisis.
Moody’s and Fitch cut Indonesia’s outlook to negative earlier this year.
S&P Global Ratings warned on July 9, 2026, that it may also announce a downgrade due to transparency issues.
Indonesia’s debt-to-GDP ratio is 40.75%, but local media reported close to a quarter of all tax receipts in 2026 would go toward interest payments.
About 834 trillion rupiah ($46.1 billion) of government debt matures this year, according to financial news outlet Kontan.
Open questions
The article does not specify how long the Strait of Hormuz closure lasted or whether it has been resolved.
Key figures
President Prabowo Subianto
Rizal Shidiq, economist at Leiden University
Arianto Patunru, fellow at the Australian National University's Indonesia Project
Siwage Dharma Negara, senior fellow at the Institute of Southeast Asian Studies (ISEAS) – Yusof Ishak Institute
Sources: dw.com
