The main risks instead emerge through indirect channels, particularly\nthe rise in energy prices, exchange rate volatility, and a slowdown in\nindustrial activity.<\/p>\n
Jakarta (ANTARA) - Indonesia Eximbank (LPEI) assesses that the direct\nimpact of the escalation of the Middle East conflict on Indonesia\u2019s\ntrade remains relatively limited.<\/p>\n
This assessment is based on the small trade exposure to the\nregion.<\/p>\n
\u201cThe main risks instead emerge through indirect channels,\nparticularly the rise in energy prices, exchange rate volatility, and a\nslowdown in industrial activity in major trading partner countries that\ncould affect Indonesia\u2019s export dynamics,\u201d said Head of Indonesia\nEximbank Institute Rini Satriani in her statement in Jakarta on\nWednesday.<\/p>\n
Data from the Central Statistics Agency (BPS), processed by the\nIndonesia Eximbank Institute, shows that Indonesia\u2019s exports to the\nMiddle East amount to only about 4.2% of total national exports.<\/p>\n
The main commodities include crude palm oil (HS 1511), jewellery (HS\n7113), and cars and other motor vehicles (HS 8703).<\/p>\n
Meanwhile, Indonesia\u2019s imports from the region reach about 3.9% of\ntotal national imports and are dominated by energy commodities,\nparticularly oil.<\/p>\n
This structure indicates that Indonesia\u2019s direct trade exposure to\nthe conflict zone is relatively limited.<\/p>\n
Most of Indonesia\u2019s exports instead flow to other regions such as\nEast Asia (36.4%), Southeast Asia (20.8%), North America (11.5%), South\nAsia (9.6%), and Western Europe (5.7%).<\/p>\n
Thus, economic dynamics in those regions remain the primary\ndeterminants of national export performance.<\/p>\n
Nevertheless, Rini said her institution continues to monitor\ndevelopments in the conflict and their implications for global trade,\nparticularly regarding the stability of international energy routes.<\/p>\n
\u201cWe are closely monitoring the dynamics in the Middle East region,\nincluding the security of strategic shipping lanes such as the Strait of\nHormuz, which is one of the world\u2019s main arteries for energy trade,\u201d she\nsaid.<\/p>\n
The Middle East region plays a strategic role in the global energy\nsystem, contributing more than 30% to world oil production.<\/p>\n
Around 20-30% of global oil trade also passes through the Strait of\nHormuz. Disruptions to this route could quickly impact international\nenergy prices and increase global logistics costs.<\/p>\n
Although Indonesia\u2019s oil imports do not come directly from the Middle\nEast, the effects are still felt through regional trade routes.<\/p>\n
About 75% of Indonesia\u2019s oil imports come from Singapore and\nMalaysia, which are hubs for oil trading and refining in Asia.<\/p>\n
Those two countries also import crude oil from the Middle East, so\nsupply disruptions could drive up domestic energy prices.<\/p>\n
The Indonesia Eximbank Institute is also observing the potential\nimpact of changes in global energy distribution on major Middle East oil\nimporters such as China, Japan, India, and South Korea.<\/p>\n
Those countries are important export markets for Indonesia, so rising\nenergy costs could pressure industrial activity and demand for\nIndonesian products.<\/p>\n
If geopolitical tensions persist, global oil prices through 2026 are\nprojected to range between $85-120 per barrel, higher than the\nearly-year average of around $60 per barrel.<\/p>\n
Rising energy prices and logistics costs could increase production\ncosts across various global industrial sectors.<\/p>\n
For Indonesian exporters, the pressure will be felt in sectors with\nhigh dependence on imported raw materials, such as manufacturing,\npetrochemicals, and basic metals. Rising input costs risk eroding\nmargins, especially if global demand weakens.<\/p>\n
Additionally, global financial market volatility could also pressure\nthe exchange rates of emerging market countries, including\nIndonesia.<\/p>\n
A weakening rupiah could increase the cost of importing raw\nmaterials, thereby adding pressure to export-oriented industries.<\/p>\n
Amid these risks, several Indonesian export commodities could\nactually benefit from rising global energy prices.<\/p>\n
Coal, which contributes about 8-9% to total national exports, could\nsee price increases. Crude palm oil (CPO) prices are also showing a\nstrong trend alongside solid global demand.<\/p>\n
Moreover, several commodities based on local raw materials will\nbenefit from previous interest rate cuts that help suppress production\ncosts, thereby enhancing the competitiveness of Indonesian export\nproducts.<\/p>\n
\u201cOverall, rising prices for energy and agricultural commodities can\nhelp support Indonesia\u2019s export performance in the short term. However,\nvolatility in metals commodities and the industrial sector still needs\nto be anticipated, especially if a deeper global economic slowdown\noccurs,\u201d said Rini.<\/p>\n
Considering commodity price dynamics and global trade conditions,\nIndonesia\u2019s exports in 2026 are projected to still grow in the range of\n4-5%, and could potentially increase to around 5-6% in 2027, provided\nglobal demand recovers gradually and geopolitical tensions ease.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/lpei-impact-of-middle-east-conflict-on-indonesias-trade-remains-limited-1773845481", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }