Analysis of the Causes of the IHSG Decline in March 2025

Abstract

The Indonesia Stock Exchange Composite Index (IHSG) is a vital indicator reflecting the dynamics of economic expectations, investor sentiment, and both domestic and global macroeconomic conditions. This study aims to identify the factors that caused the significant decline of the IHSG in March 2025 through a qualitative approach based on literature review. The analysis reveals that the sharp drop in the IHSG was not triggered by a single factor but rather by an accumulation of global and domestic pressures: the second wave of the China–US trade war, the state budget deficit (APBN), weakening consumer purchasing power, and national political issues such as speculation about the resignation of the Minister of Finance. The sharp decline on March 18, 2025, which resulted in a temporary trading halt, reflects a market panic driven by systemic uncertainty and sudden shifts in investor expectations. Compared to the stable conditions of March 2024, this turmoil indicates a market landscape that has become increasingly vulnerable to speculative information and a crisis of confidence. This study recommends strengthening fiscal policy, improving public communication transparency, and enhancing the resilience of the capital market system against external volatility.