April 17, 2025

Indonesia’s Money Flow is Getting Stronger After Eid

Market Commentary

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Good news is coming for Indonesia’s economy. While many are still worried about trade problems between the U.S. and other countries, something important is happening here at home—there’s more money flowing into the economy.

After this year’s Eid al-Fitr (Lebaran), Bank Indonesia noticed a big increase in cash moving around. The amount of base money (called M0) grew by 15.8% in March compared to last year. That’s a big jump—and a sign that banks and businesses will have more money to work with in the next few months.

What’s helping this?

Bank Indonesia is giving support to banks.
It has already handed out IDR 295 trillion through a special program (KLM) to help banks lend more, especially to businesses that support the economy. BI even raised the limit in April so banks can get more help.
Less money is being locked up in government bonds.
BI reduced the amount of money it takes out of the system by issuing fewer of its own bonds (called SRBI). This means banks now have extra money that they can use to give out loans or invest.

Indonesia Money Supply Growth

What Does This Mean?

More loans and easier credit: Banks can lend more money to people and businesses.
Stock market might go up: If the broader money supply (called M2) grows by 12–14%, the stock market (JCI) could rise by up to 30%.

Indonesia M2 Money Supply vs JCI Index

Government borrowing costs could fall: With more people buying government bonds, interest rates on those bonds may drop to around 5.5%–5.8%.

Indonesia M2 Money Supply vs 10 year Government Bond Yield

Indonesia’s money system is starting to move again. With more cash flowing, more support from the central bank, and strong Eid spending, we expect economic growth to stay steady at around 5.1% for 2025. This is a great setup for stronger lending, healthier markets, and a growing economy in the second half of the year.

As Indonesia’s economy strengthens with increased liquidity and post-Eid spending, we maintain an Overweight view on banks and consumer sectors—meaning we expect them to outperform the broader market. Banks are benefiting from easier access to central bank funds and lower funding costs, allowing them to boost lending. Meanwhile, strong consumer demand, supported by rising money supply and stable inflation, is driving growth in retail and essential goods. Together, these factors make these three sectors well-positioned for continued performance and worthy of greater investment focus.

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April 17, 2025

April 17, 2025

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