Can Indonesia Maintain the Current Investment Grade?

Summary

Amid economic turbulence due to the COVID-19 pandemic, Indonesia is still able to maintain its investment grade. The rating agency, Fitch Ratings, affirmed Indonesia's Sovereign Credit Rating at BBB (investment grade) with a stable outlook. In a written statement on August 10, 2020, Fitch revealed that the good prospects of medium-term economic growth and the relatively low government's debt were among the supporting factors of the BBB rating.

However, Fitch also warned that Indonesia might face severe challenges in the future. The dependence on external sources of financing might increase, the government revenues would be low, and Indonesia's Gross Domestic Product (GDP) would lag behind other countries. Fitch also estimated that Indonesia's economic growth would contract by two percent in 2020 due to the COVID-19 pandemic.

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