Crypto News: Cracks in Indonesia

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Prabowo Subianto has been flirting with disaster for months, and this week he got a taste of it.

Cracks in Southeast Asia's biggest economy were laid bare on Tuesday as investor concerns over the ex-general-turned-president's fiscal policies and rumored resignations within his Cabinet drove Indonesia's worst stock slide in years.

Even as his finance minister emerged to dispel the speculation, many were calling into question populist spending measures that will leave a lasting mark on the nation of 280 million.

If that wasn't enough, student protests erupted today after lawmakers passed legislation expanding the role of the military, rolling back curbs installed two decades ago after the Suharto dictatorship and stoking concerns of democratic backsliding.

Hundreds gathered outside the legislature in Jakarta, with some throwing stones and setting tires ablaze as they demanded lawmakers reverse the changes, according to local reports.

It's a bad look for one of the world's biggest emerging markets, and a key supplier of critical minerals used in electric-vehicle batteries.

Indonesian troops in Jakarta in October. Photographer: Juni Kriswanto/AFP/Getty Images

Prabowo has been stirring unease since taking office in October. A $30 billion-a-year free-lunch program for students — a signature campaign pledge that helped him secure an electoral landslide — equates to 14% of Indonesia's entire 2024 budget.

His government is working on plans that could dilute the central bank's independence, while aggressive protectionist policies have marked foreign businesses like Apple as targets.

None of this appears to pose any imminent threat to Prabowo, who remains popular and enjoys an overwhelming parliamentary majority. Equally, though, it bodes ill for his pledge to boost economic growth to 8%, a goal analysts increasingly dismiss as unrealistic.

As Asia grapples with the fallout from waning Chinese demand and US President Donald Trump's tariff threats, Indonesia could take a lead as an important "swing state" between Washington and Beijing.

Instead, Prabowo risks becoming another example of a strongman overplaying his hand. — Philip Heijmans

Prabowo speaks in Jakarta last week. Photographer: Yasuyoshi Chiba/AFP/Getty Images

Global Must Reads

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The selloff in Turkish assets eased as authorities announced steps to curb volatility after the detention of President Recep Tayyip Erdoğan's main political rival sparked a market rout. Istanbul Mayor Ekrem İmamoğlu was taken into custody early yesterday on corruption charges he denies, sparking protests from opposition parties and drawing international condemnation.

Israel began a limited ground operation in Gaza yesterday, with troops returning to some positions outside population centers and officials vowing further pressure unless Hamas releases its 59 remaining hostages. The ground incursion is the first since a six-week ceasefire officially lapsed this month and follows airstrikes across Gaza that killed hundreds of people, raising concerns about a return to all-out war.

A new "China Shock" of cheap goods wiping out local jobs and producers is being felt in emerging economies as Chinese exporters seek to replace orders they lost after Trump hiked US tariffs. He threatened to hit India with like-for-like duties from April 2, even as officials in New Delhi scurry to appease Washington by reducing trade barriers.

Trump said the Federal Reserve should cut interest rates, splitting with the US central bank as officials weigh the economic cost of the president's tariff push. Fed Chair Jerome Powell downplayed concerns about weaker growth but acknowledged tariff uncertainty was a factor and already contributing to goods inflation.

UK Prime Minister Keir Starmer will "lay the keel" for the first in the next generation of the UK's nuclear-armed submarines, a symbolic gesture as concerns grow about the nation's reliance on the US to maintain its arsenal.

Colombian President Gustavo Petro is close to naming Germán Ávila, the head of the country's state-run banking group, as his next finance minister, a source says.

Canadian Prime Minister Mark Carney, whose Liberal Party has jumped into a lead in some public opinion polls, is poised on Sunday to call a snap federal election for an expected vote on April 28, the Globe and Mail reported.

The US is stalling the distribution of $2.6 billion in climate finance to South Africa, stoking concerns the money might be blocked outright, sources say.

On the new episode of Trumponomics: Bloomberg Economics Chief Economist Tom Orlik explains to host Stephanie Flanders that the Trump administration is possibly more strategic than it seems. He offers historical perspective on the president's moves and says the bumpy road may take the economy to a better long-term destination. Listen on Apple, Spotify, or wherever you get your podcasts.

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Chart of the Day

Finland's streak as the world's happiest country continued for an eighth year, while the US fell to 24th place, its lowest to date in the global ranking. Denmark, Iceland, Sweden and the Netherlands rounded out the top five, according to researchers at the University of Oxford in the UK.

And Finally

Spain is bracing for more torrential rain after flooding prompted home evacuations, washed away cars and killed at least three people this week in the southern region of Andalusia. Authorities have issued warnings of more wind and showers coming today to southern areas near the coast as the fourth storm to hit the country this month approaches. Alerts are also in place for the north of Spain and much of Portugal.