Global Oil Crisis Hits, Indef Reveals Indonesia Could Grow Up to 7 Percent Instead
Economist from the Institute for Development of Economics and Finance (Indef) and Rector of Paramadina University, Didik J. Rachbini, has criticised the narrative surrounding the oil price crisis circulating in the public domain. According to him, rather than weakening the national economy, the situation could become an opportunity to drive higher economic growth.
Didik explained that discussions on social media and online outlets regarding the impact of the oil price crisis due to the US-Israel conflict with Iran are often portrayed as extremely dire. However, global shocks from oil price fluctuations have occurred repeatedly since the administrations of Soeharto, Abdurrahman Wahid, Susilo Bambang Yudhoyono, and up to Joko Widodo.
“Now we are facing it in reality. Our perspective must be out of the box, seeing that behind the crisis there is also opportunity. We must utilise the oil price crisis to strengthen Indonesia’s natural hedge sectors (natural resources),” said Didik in a statement received by Republika, quoted on Saturday (11/4/2026).
In facing the crisis, Indonesia is seen to have structural advantages in natural resource-based (SDA) sectors. These sectors can act as shock absorbers during global energy crises. The right policies will determine whether these sectors only serve as short-term saviours or can become the foundation for long-term economic transformation.
“This oil price crisis will clearly pressure Indonesia’s economy through increased energy costs, fiscal pressures from subsidies, and exchange rate weakening. However, behind these pressures, there are several sectors that show resilience and even emerge as winners,” he explained.
These sectors include coal mining, crude oil, gas, geothermal, metal ores (nickel, tin, bauxite), as well as plantations such as crude palm oil (CPO) and rubber.
Didik said these sectors have domestic inputs in rupiah, while their outputs are exports that generate foreign exchange such as US dollars, yen, or yuan, thus benefiting from rupiah depreciation.
“Imports of crude oil and fuel are highly vulnerable to global oil price increases, impacting the current account balance, fiscal subsidy burdens, and rupiah depreciation. However, at the same time, certain SDA-based sectors experience a windfall effect. During the SBY administration, when oil prices rose high, these sectors were able to drive economic growth around 6.5 percent,” he clarified.
“This happened because global commodity prices increased, boosting export demand. Rupiah depreciation also enhanced export competitiveness,” he continued.
Didik noted that there are at least four resilient sectors with potential to act as natural hedges. First, coal mining, which serves as a substitute for oil energy domestically. Increased global demand when oil prices are high provides opportunities to boost foreign exchange and state revenues through windfall taxes.
“Actually, with rising prices, lifting of oil, gas, and geothermal can be increased because production costs become relatively cheaper,” he stated.
Second, the metal ore mining sector such as nickel, tin, and bauxite, whose demand is high in normal conditions and increases during crises for global industry needs like electric vehicles (EV), electronics, and construction.
Third, the plantation sector such as CPO, rubber, cocoa, coffee, and others. CPO products play a strategic role as an energy substitute through biofuel.
“The dominant export dynamics benefit from rupiah depreciation. All of this is a blessing even in crisis conditions, because we have a natural hedging cushion,” he said.
Didik emphasised that all these potentials must be incorporated into policy frameworks. Rupiah depreciation can increase export revenues in rupiah terms, while the domestic cost structure remains relatively unchanged as it is mostly local-based.
“The government must not surrender to the oil price crisis pressures because we have a natural hedge. Adaptive fiscal strategies are needed, optimising state revenues from those windfall profits,” he stressed.
Additionally, he assessed that businesses also need to contribute. The government can transparently capture additional gains from the situation. The Nusantara Future Investment Management Agency (BPI Danantara) also has potential to gain windfall profits from related sectors.
“This crisis, for a smart government, becomes an opportunity for transformation towards 6-7 percent growth. Downstream processing policies and value addition of products gain the right momentum with an export orientation,” he revealed.
Didik explained that Indonesia’s economic growth will not exceed 5 percent if it only relies on domestic sectors and government spending. Acceleration of downstream processing is needed for commodities like nickel, bauxite, cocoa, seaweed, fisheries, and CPO.
This transformation is directed towards strengthening resource-based industries, namely industrialisation based on natural resources such as smelters, biofuels, and green industries.
“Even energy transition policies can gain momentum in this crisis condition. We must utilise the windfall to fund the transition towards a low-carbon economy while integrating flagship sectors into the green economy roadmap,” he continued.
Didik concluded that the oil price crisis should not be viewed merely as a burden, but as a momentum for efficiency, savings, and fiscal consolidation.