Financial Markets Fluctuate Amid Escalation of Middle East War, OJK Conducts Stress Tests
REPUBLIKA.CO.ID, JAKARTA – The Financial Services Authority (OJK) has stated that the ongoing escalation of the war between Iran and the US-Israel in the Middle East has impacted the financial sector. OJK is conducting stress tests to detect risks from the conflict’s effects on the domestic financial markets.
“The uncertainty surrounding the resolution of the Iran conflict with the US and Israel, which has resulted in fluctuations in the financial markets, has prompted OJK to carry out intensive monitoring to ensure the resilience of the financial services sector, including stress tests with various scenarios for the financial services industry and strengthening supervision of financial institutions,” said OJK Commissioner Chairperson Friderica Widyasari Dewi during the online press conference for the May 2026 Commissioners’ Meeting (RDK) on Tuesday (5/5/2026).
Friderica, commonly known as Kiki, explained that OJK is also encouraging financial institutions to strengthen the implementation of comprehensive risk management, including conducting stress tests periodically and improving the quality of assessments for market risk and credit risk exposures.
“In anticipation of future market dynamics, OJK, together with Self-Regulatory Organisations (SROs), continues to monitor market developments and take necessary policy responses. Several policy instruments to maintain stock market stability are deemed still relevant and their validity periods have been extended,” she added.
Based on the evaluation results from OJK’s RDK on 30 April 2026, OJK assesses that the stability of the financial services sector remains maintained amid global economic dynamics. The global economy’s performance in April 2026 faces ongoing geopolitical uncertainties, although there were reports of a ceasefire agreement between Iran and the US-Israel. The closure of the Strait of Hormuz continues due to blockades by both parties, so disruptions to global energy distribution have not fully subsided.
“This situation is driving oil prices to remain volatile and at high levels,” said Kiki.
The IMF’s World Economic Outlook for April 2026 has cut the global growth projection to 3.1% for 2026 and assesses that inflation risks are increasing. Geopolitical fragmentation, debt pressures, and supply chain disruptions are factors weakening future growth. Global inflation pressures are also rising, prompting expectations of monetary policy tightening in several advanced economies.
Meanwhile, the US economy shows signs of weakening, with first-quarter 2026 growth estimated to decline. Inflation pressures are predicted to rise again, particularly triggered by increases in goods and energy prices. Amid these conditions, the Federal Reserve decided to maintain its benchmark interest rate at the Federal Open Market Committee meeting at the end of April 2026.
On the other hand, China’s economy recorded first-quarter 2026 growth in line with the target at 5%, supported by exports and the manufacturing sector. However, on a month-to-month basis, growth is starting to weaken.
“Domestically, as just announced by BPS (Statistics Indonesia), the national economy grew solidly at 5.61%, supported by contributions from household consumption and increased government spending,” she explained.
Kiki elaborated that from the demand indicators side, the Consumer Confidence Index (IKK) remains in the optimistic zone, although moderated. Retail sales growth was recorded at 2.4% year-on-year (yoy), while motor vehicle sales contracted annually. From the external resilience side, foreign exchange reserves in March 2026 stood at US$148.2 billion, with the trade balance remaining in surplus for 71 consecutive months since May 2020.