Indonesia's Latest Economic Data Amid Israel-Iran War Threat
Jakarta — The global economy has become unstable due to escalating geopolitical conflicts amongst the United States, Israel, and Iran. However, the Indonesian government remains vigilant and continues monitoring potential impacts on the national economy.
Several indicators demonstrate that Indonesia’s economic fundamentals remain sound, supported by strong domestic demand, external sector stability, and solid coordination of fiscal and monetary policies.
“Despite the US-Israel-Iran conflict continuing for more than two weeks, the transmission to Indonesia primarily manifests through oil prices, gas prices, and consequently commodity prices,” said Coordinating Minister for Economic Affairs Airlangga Hartarto at a discussion and breaking of fast event organised by the Macro Economics Journalists Communication Forum (Forkem) in Jakarta on Monday, 16 March 2026. “Although in a conflict situation, macroeconomically we remain strong and solid.”
On this occasion, Airlangga explained that domestic consumption remains robust, contributing approximately 54% to GDP, whilst consumer spending activity is maintained with the Mandiri Spending Index for February 2026 reaching 360.7. Regarding external stability, Indonesia’s foreign debt ratio stands at 29.9% of GDP, with foreign exchange reserves of USD151.9 billion, equivalent to approximately six months of import financing.
The real sector performance shows positive trends. The Manufacturing PMI for February 2026 stood at 53.8, indicating that the manufacturing sector remains in an expansion phase. Increases in commodity export prices, including coal, rubber, nickel, copper, and aluminium, provide natural hedging, with export values around USD47 billion helping offset the oil and gas sector deficit of approximately USD19.5 billion. Meanwhile, national rice production in 2025 reached 34.7 million tonnes, representing a 13.54% increase year-on-year, whilst Indonesia also recorded diesel production surplus of approximately 4.84 million kilolitres.
The government continues to strengthen coordination of fiscal and monetary policies to maintain national economic stability. Bank Indonesia undertakes market interventions to maintain rupiah exchange rate stability, whilst Local Currency Settlement (LCS) transactions with partner countries such as Malaysia, Thailand, Japan, and China have increased significantly, reaching USD25.66 billion in 2025, nearly double the previous year.
In navigating global dynamics, the state budget functions as a shock absorber through various support programmes, including food assistance of Rp11.92 trillion and energy subsidies and compensation. By February 2026, state revenue reached Rp358 trillion, approximately 12.8% of the APBN target, whilst state expenditure reached Rp493.8 trillion, representing 41.9% of the APBN ceiling. The budget deficit remains controlled at approximately Rp135.7 trillion, or about 0.53% of GDP.
Coordinating Minister Airlangga further conveyed that President Prabowo Subianto has provided strategic directives to mitigate the impact of geopolitical conflicts on the national economy, including accelerating energy availability, implementing fuel consumption efficiency measures, expanding work-from-home policies, and strengthening fiscal discipline to keep the APBN deficit below the 3% of GDP threshold.
Airlangga also provided an update regarding developments in the United States Section 301 investigation. The Indonesian government stated its readiness to follow consultation stages with the US government to seek constructive solutions. In this process, the government will also involve relevant ministries, industry associations, and businesses to prepare necessary information.