Indonesia Monitors Global Economic Impact of Democrats' US Midterm Win
Indonesia is assessing how Democratic control of the US Congress could reshape global economic and geopolitical policy, Coordinating Minister for Economic Affairs Airlangga Hartarto said Thursday. His comments came as the rupiah strengthened and investors responded to the election results.
Election gains shift market expectations
Speaking at a Jakarta press conference after the November 3, 2026, midterm elections, Airlangga said the government was watching the implications of the Democratic victory.
"We see that both Congress and the Senate are controlled by the Democrats. This will certainly impact global economic and geopolitical policies," he said.
Democrats won approximately 240-245 House seats, compared with about 145-166 for Republicans. Their Senate tally was 54 seats against the Republicans' 44, giving Democrats control of both chambers previously held by President Donald Trump's Republican Party.
The rupiah opened trading on November 5 at Rp18,070 per US dollar, up 98 points from its previous close of Rp18,168. Bank Woori Saudara market analyst Rully Nova attributed the gain to expectations that Democrats would constrain the Trump administration's discretion over tariffs, taxes, the budget deficit and government bond issuance, according to Tempo.
Rully said those expectations encouraged global investors to shift their portfolios toward riskier assets. The same change in sentiment contributed to a 10.1-basis-point decline in the 10-year US Treasury yield to 4.86 percent and a weakening of the US Dollar Index, or DXY, to 101.3, Tempo reported.
Global forecasts and Indonesia's economic position
Airlangga's assessment also covered interest rates, inflation and growth. He cited pressure surrounding the Federal Reserve's interest rate, held at 3.75-4 percent, alongside the 4.86 percent yield on 10-year US Treasury debt.
The global outlook he outlined put inflation at 4.7 percent in 2026, easing to 4.1 percent in 2027. Economic growth worldwide was projected at 3.1 percent this year and 3.4 percent next year.
Airlangga had presented Indonesia's domestic figures at an October 21 plenary cabinet meeting. He reported first-half economic growth of 5.45 percent, above the global average of about 3 percent and, he said, the highest among G20 nations. The state budget deficit stood at 1.24 percent, while foreign exchange reserves totaled $146.3 billion, enough to cover 6.5 months of imports.
Oil costs and energy subsidies
Energy prices are another focus for Jakarta. Global crude prices reached $117 a barrel at the end of October, but Airlangga said Indonesia's energy purchasing prices were around $93, below $100. He said the state budget, known as the APBN, could absorb energy price fluctuations through the end of the year.
Oil markets subsequently fell sharply on November 4. Tempo, citing Anadolu Agency, reported that Brent settled at $95.05 a barrel after losing $8.55, or 8.25 percent, its first finish below $100 in a month. US West Texas Intermediate declined $7.81, or 8.13 percent, to $88.28 a barrel.
Indonesia has increased its 2026 allocation for energy subsidies and compensation from the budgeted Rp338 trillion to Rp500 trillion in anticipation of a higher Indonesian Crude Price, or ICP, according to Fortune Indonesia.
Finance Minister Suahasil Nazara said on November 3 that payments had reached Rp333.9 trillion as of October 30. The average ICP through the end of October was $93 a barrel, compared with the budget assumption of $70, using an exchange rate of about Rp17,508 per US dollar.
For 2027, the government and Indonesia's House of Representatives, or DPR, agreed on an energy subsidy allocation of Rp261.50 trillion, a reduction of Rp11.44 trillion from the government's Rp272.95 trillion proposal. The allocation includes Rp131.39 trillion for fuel and 3-kilogram LPG subsidies and Rp130.18 trillion for electricity subsidies.