Government emphasises strong economic fundamentals amid Middle East conflict

Macro indicators remain stable, so the public need not worry. The government emphasises that Indonesia’s economic fundamentals are still strong in facing external uncertainties triggered by geopolitical dynamics in the Middle East. Haryo Limanseto, spokesperson for the Coordinating Ministry for Economic Affairs, said the government continues to monitor developments in the global situation carefully. “Macro indicators remain stable, so the public need not worry. The government hopes there will soon be the best solution for all global conflicts,” he said, contacted in Jakarta on Wednesday. He stressed that the government’s focus at present is to ensure the effectiveness of various stimulus measures that have been in place since Q1 2026. The programmes are projected to cushion household purchasing power against the transmission of the global conflict. “The stimuli already in place, we believe, are able to safeguard household purchasing power, so external pressures can be minimised. The government will continue to ensure that these policies are effective and targeted,” he said. In a separate interview, M Rizal Taufikurahman, head of the Centre for Macroeconomics and Finance at Indef, assessed that the Middle East conflicts could potentially trigger higher global oil prices, directly impacting Indonesia’s energy import costs. He noted that as a net oil importer, a spike in world oil prices could widen energy subsidies and compensation in the State Revenue and Expenditure Budget (APBN). In the 2026 APBN, the government allocated energy subsidies around Rp210.1 trillion out of total subsidies Rp318.9 trillion. However, Indef’s calculations show that escalation of the Iran–US–Israel conflict could significantly increase subsidy needs. In a light scenario, energy subsidies are forecast to rise to Rp218.1 trillion. If the conflict lasts longer, subsidy needs could reach Rp240.98 trillion, even in a heavy scenario rising to Rp278.59 trillion. “If the war lasts a full quarter, every rise of $10 per barrel in oil would add about Rp25 trillion to energy subsidies,” Rizal said. To maintain purchasing power and spur economic growth, the government has launched an economic stimulus package in Q1 2026. One of them is transport incentives for Lebaran homecoming, including rail ticket discounts of 30 percent, sea transport 30 percent, ferry services 100 percent, and airline ticket discounts of 17–18 percent. Budget estimates for transport incentives reach Rp911.16 billion, consisting of APBN Rp639.86 billion and non-APBN Rp271.5 billion. Additionally, the government channels food aid worth Rp12 trillion to beneficiary families. The aid consists of 10 kilograms of rice and 2 litres of cooking oil for two months, February–March, to 35.04 million families.