Heaptalk, Jakarta — Indonesian government is taking a proactive stance, emphasizing regional stability and de-escalation, to reduce the Iran-Israel conflict’s global economic impact.
“From an economic perspective, surely we saw a spike in oil prices due to the Israeli attack on the Iranian Embassy in Damascus and also the retaliation carried out by Iran,” said the Coordinating Minister for Economic Affairs Airlangga Hartarto.
From an economic perspective, the Red Sea and the Strait of Hormuz play an essential role, primarily as the Strait of Hormuz has 33,000 oil vessels, while the Red Sea has around 27,000. Besides, the freight cost increase is one thing that must be mitigated.
Despite the geopolitical challenges, the Indonesian economy stands strong, showing a solid growth of 5% and maintaining controlled inflation in the range of 2.5%. “Our trade balance remains in surplus, and our foreign exchange reserves stand strong at US$136 billion,” he confidently stated.
Airlangga further explained that global financial markets were experiencing uncertainty with the dollar index strengthening, while the exchange rate and global stock price index showed weakness. However, compared to other countries, Indonesia is still relatively safe.
He voiced, “We undoubtedly need to implement various policies, including a fiscal and monetary mix, maintaining exchange rate stability, maintaining the State Budget, and monitoring increases in logistics and oil prices.”
Faced with global economic turmoil, the Indonesian government remains focused on policies that support the real sector and stabilize the exchange rate to reduce the impact on imports. The government also notes the benefits for exporters who receive more foreign exchange.
“The government continues to look at structural reform, maintain investors’ expectations, strengthen competitiveness, and attract long-term investment to Indonesia. These certainties must be maintained,” he concluded.
