Market volatility highlights Indonesia’s overlooked climate and resource risks

INDONESIA’S recent episode of financial market volatility, including a reported US$80 billion stock-market rout that prompted emergency reassurances from the government and the resignation of the Indonesia Stock Exchange chief executive and senior officials at supervisory entities, has revived familiar issues of market confidence, regulatory oversight and transparency.

Public discussion has largely focused on liquidity management, disclosure practices and institutional credibility. Yet these explanations, while important, capture only part of the picture.

Viewed alongside developments in the natural resource sector, the episode points to a deeper and more structural challenge: the growing interaction between financial stability, natural capital and climate-related physical risk in a resource-dependent economy such as Indonesia.