Prolonged Middle East War: Indonesian Economists Warn of This

Jakarta, CNBC Indonesia - Economists and economic experts see the potential for Indonesia’s economic growth to remain stagnant over the next three months. This was revealed in the Economic Survey Report by the Institute for Economic and Social Research (LPEM) at the Faculty of Economics and Business, University of Indonesia (FEB UI).

“Looking ahead over the next three months, experts generally predict that the pace of economic growth will remain unchanged from the current figure,” according to the LPEM FEB UI survey report, quoted on Monday (30/3/2026).

The survey was conducted by LPEM FEB UI on 85 economic experts from 24 February to 9 March 2026.

“The majority, namely 36 out of 85 experts (42%), share this view, followed by 28 experts (33%) who anticipate a worsening condition and 21 economic experts (25%) who predict an improvement,” based on the survey results.

LPEM FEB UI noted an average response of -0.11, right at the neutral point, reflecting a collective expectation of general stagnation with a slight downward tendency. The relatively moderate confidence score of 7.47 indicates uncertainty among the experts. The subdued growth outlook generally points to stagnant business activity and cautious consumer spending in the coming months.

Experts say they anticipate inflationary pressures to increase over the next three months relative to the current figure.

The dominant portion, namely 64 out of 85 experts (75%), predict the pressure will rise, while 18 (21%) see no change, and only a small minority of 3 (4%) anticipate easing.

According to the survey, the average response reached a strong figure of 0.91 with a relatively high confidence score of 7.60: “Indicating a broad and strong consensus that inflation will intensify in the near term.”

Experts partly attribute this outlook to ongoing geopolitical tensions, as disruptions to global supply chains and energy markets due to conflicts tend to spill over into domestic price levels.

This result also marks a significant increase from the previous round’s average of +0.55, indicating that experts’ concerns about inflation are not only persisting but also intensifying.

Then, in anticipating labour market conditions over the next three months, the majority of experts, namely 37 out of 85 (44%), predict conditions will remain unchanged. However, the combined weight of 39 (46%) experts who expect the market to tighten is substantial enough to pull the overall assessment into strongly negative territory. Only 9 (11%) predict the labour market will loosen.

The average response of -0.52 reflects labour market prospects that, while dominated by stagnation expectations, harbour significant concerns.

“This figure reflects a weakening from the previous round’s average of -0.38, indicating that experts’ concerns about the labour market are deepening rather than stabilising. The moderate confidence score of 7.46 out of 10 shows uncertainty among the experts,” the survey report states.

Experts generally anticipate the business environment will remain unchanged over the next three months, with the majority, namely 40 out of 85 (47%), holding this view. However, an almost equal portion of 39 (46%) predict conditions will worsen. Only 6 (7%) expect the business environment to improve.

“The average response of -0.49 reflects a broader pattern of stagnation-dominated expectations but with a negative bias seen throughout this survey round.”

This figure marks a further decline from the previous round’s average of -0.28, indicating that experts’ concerns about the business environment continue to accumulate rather than stabilise. The confidence score stands at 7.57 out of 10.

Coordinating Minister for the Economy Airlangga Hartarto believes Indonesia’s first-quarter 2026 economic growth will reach 5.5%. This figure matches the government’s benchmark target previously set at 5.5-6% for the first three months of this year. This growth will be driven by Ramadan activities.

“It looks like the 5.5 target can be achieved. The vibrancy during Ramadan,” Airlangga told the media at the DJP Mosque some time ago.

The Coordinating Minister also said inflation this year could potentially rise due to the low base effect from deflation last year when there was a policy of subsidised electricity tariffs in January-February 2025.

In addition, Airlangga emphasised that Work From Anywhere will be implemented after the long Eid holiday and is aimed at civil servants (ASN) as well as recommendations to private sector workers.

“WFA after Eid will be implemented. (For) ASN or recommendations to the private sector but not for public services,” Airlangga added.

Nevertheless, inflation due to rising global oil prices is a risk that concerns the public. Regarding this, Finance Minister Purbaya Yudhi Sadewa has assured that the government will not raise subsidised oil or subsidised fuel (BBM) prices.

He also ensured that the State Budget (APBN) remains safe if oil prices reach US$100 per barrel. This has been conveyed by Purbaya to Prabowo.

He also emphasised that the 2026 State Revenue and Expenditure Budget (APBN) deficit will not exceed the safe limit of 3%. In 2025, the deficit was recorded at Rp 695.1 trillion or 2.92% of GDP.