Election due: Elections for a new parliament expected in April, followed in July by a presidential election. If there is no clear winner in the first round of voting in the presidential election, a second round is expected to take place in September.
Backdrop: Like its emerging market peers, Indonesia has come under pressure from an unwinding of U.S. monetary stimulus that has exposed economic weaknesses such as a wide current-account deficit. The central bank has hiked rates five times since the middle of last year to prop up a crumbling currency. While the economy, the biggest in Southeast Asia, grew a better-than-expected 5.72 percent on year in the fourth quarter, economists say political uncertainty, the impact of monetary tightening and a controversial mineral export ban will all be headwinds in the coming months.
Key election themes: Endemic corruption, poor infrastructure, under investment in health and education.
Expected outcome: Analysts say it's unlikely that any one party will win an outright parliamentary majority. The best case scenario for markets, they say, is one in which a big party wins a sizeable chunk of seats that enables it to form a coalition with one or two other parties. The country's main political parties include President Susilo Bambang Yudhoyono's Partai Demokrat and the opposition Democratic Party-Struggle run by former President Megawati Sukarnoputri.
Candidates for the presidential election are not expected to be announced until after the parliamentary vote. One potential candidate is popular Jakarta governor Joko Widodo, known as Jokowi. He is viewed as a favorite to win if selected to run.
The wild card: Watch the youth vote. Of the projected 187 million eligible voters in this year's elections, over a third will be between the age of 16 and 20. Indonesia's politicians face a young electorate that is increasingly online and this could well shape the political landscape in the years ahead, analysts say.
View from the experts: "From the market perspective, a Joko government might be the best case scenario – primarily for the chance of breaking the parliamentary deadlock, which has held back tough economic reforms," says Wellian Wiranto, an economist at OCBC Bank.