BI: Indonesia's Economic Strengthening Momentum Must Be Preserved Amid Middle East Conflict

Jakarta – Bank Indonesia (BI) views the momentum of Indonesia’s economic growth strengthening as requiring continuous protection amid the ongoing conflict in the Middle East.

“Going forward, the deteriorating impact of the global economy and financial markets due to the Middle East war needs to be anticipated and responded to appropriately to preserve the momentum of national economic growth,” said Bank Indonesia Governor Perry Warjiyo during a press conference on the results of the Bank Indonesia Board of Governors Meeting held virtually in Jakarta on Tuesday.

Perry stated that policy synergy between the government and central bank, as well as other stakeholders, would be strengthened further to maintain domestic demand and support economic growth within the range of 4.9 to 5.7 per cent.

Business and household confidence also needs to be continuously preserved so that household consumption and investment can continue to be encouraged.

Various government programmes with strong impact in promoting growth and absorbing labour whilst maintaining fiscal resilience can also continue to be pursued.

“Bank Indonesia will continue to strengthen its policy mix through monetary policy, macroprudential measures, and payment systems that work in close synergy with government policy to maintain stability whilst supporting economic growth,” Perry stated.

Indonesia’s economic growth in the first quarter of 2026 is estimated to increase and be sufficiently high, supported by strong domestic demand.

Household consumption has risen, supported by increased household demand related to national religious celebrations, in line with improved income across several income groups sourced from year-end allowance payments (THR), government social spending, and various other government incentives.

Investment is also estimated to remain solid, driven primarily by acceleration of government investment including village/sub-district red and white cooperatives (KDMP) and Danantara investment.