Indonesia's Exports Projected to Grow 4%–5% Still, Here Are the Notes
EXIMBANK or the Indonesia Export Financing Agency (LPEI) estimates that the Indonesian economy is still projected to grow by 4-5 percent, taking into account commodity price dynamics and global trade conditions. However, there are conditions that could enable the Indonesian economy to grow.
“Considering the dynamics of commodity prices as well as global trade conditions, Indonesia’s exports in 2026 are estimated to still be able to grow in the range of 4–5%, and have the potential to increase to around 5–6% in 2027, with the note that global demand recovers gradually and geopolitical tensions ease,” said Head of the Indonesia Eximbank Institute, Rini Satriani.
She stated that the direct impact of the escalation of conflict in the Middle East on Indonesia’s trade is estimated to be relatively limited. This is because Indonesia’s trade exposure to the region remains small.
Data from the Central Statistics Agency (BPS) processed by the Indonesia Eximbank Institute shows that Indonesia’s exports to the Middle East are only around 4.2% of total national exports. The main commodities include palm oil (HS 1511), jewellery (HS 7113), and cars and other motor vehicles (HS 8703).
Meanwhile, Indonesia’s imports from the region reach around 3.9% of total national imports and are dominated by energy commodities, particularly oil.
“That trade structure indicates that Indonesia’s direct trade exposure to the conflict area is relatively limited,” said in a statement received on Thursday (19/3).
Based on the latest data, most of Indonesia’s exports flow to other regions such as East Asia (36.4%), Southeast Asia (20.8%), North America (11.5%), South Asia (9.6%), and Western Europe (5.7%). Therefore, economic dynamics in those regions remain determining factors for national export performance.
Rini said that the development of the conflict and its implications for global trade continue to be monitored, especially regarding the stability of international energy routes.
“We are closely monitoring the dynamics in the Middle East region, including the security of strategic shipping lanes such as the Strait of Hormuz, which is one of the world’s main energy trade arteries,” said Rini.
The region plays a strategic role in the global energy system because it contributes more than 30% of world oil production. Meanwhile, around 20–30% of global oil trade passes through the Strait of Hormuz. Disruptions to this route can quickly affect international energy prices while increasing global trade logistics costs.
Although Indonesia’s oil imports do not directly come from the Middle East, the impact can still be felt through regional trade routes. Around 75% of Indonesia’s oil imports come from Singapore and Malaysia, which are oil trading and processing hubs in Asia.
Both countries also import crude oil from the Middle East, so supply disruptions in the region could drive up energy prices faced by Indonesia.
The Indonesia Eximbank Institute is also observing the impact of changes in global energy distribution on major Middle East oil importing countries such as China, Japan, India, and South Korea. These countries are major energy consumers from the Gulf region as well as important export markets for Indonesia.
“An increase in energy costs has the potential to pressure industrial activity in those countries and affect demand for Indonesian export products,” she said.
If geopolitical tensions persist for a relatively long period, global oil prices throughout 2026 are estimated to move in the range of US$85–US$120 per barrel on average. That figure is higher than the early year average which is still around US$60 per barrel.
Rini explained that rising energy prices and logistics costs have the potential to increase production costs in various global industrial sectors. For Indonesian exporters, this pressure will be more felt in sectors with high dependence on imported raw materials, such as manufacturing, petrochemicals, and basic metals industries.
“In such conditions, rising input costs can erode production margins, especially if at the same time global demand experiences a slowdown,” she clarified.