Trade Minister Budi Formulates Strategy to Mitigate Iran-Israel Conflict Impact

The Indonesian government is preparing a series of anticipatory measures to mitigate the global economic impact of escalating attacks by the United States and Israel on Iran, particularly regarding the trade sector.

Trade Minister Budi Santoso stated that whilst previous Iran-Israel conflicts have not significantly affected Indonesia’s economy, an escalation leading to the closure of the Strait of Hormuz could potentially cause global oil prices to surge. Rising energy costs would directly impact production expenses, transportation fees, and consumer goods prices.

“Oil and raw material prices will surely increase,” Budi explained when met at the Trade Ministry office in Jakarta on Monday, 2 March 2026. “However, our economic growth is largely supported by domestic consumption. So we must empower that and maintain it.”

He noted that the manufacturing and export sectors will be most affected by increased production and logistics costs. However, this challenge is not unique to Indonesia but is global in nature. Therefore, the government’s second strategy is to encourage exports to markets relatively unaffected by the conflict. Export destination diversification is considered crucial to maintain trade momentum amid global uncertainty.

The government will maximise various stimulus measures already in place, particularly ahead of the Ramadan season, and will promote collaboration with the private sector to sustain domestic economic circulation.

“We will anticipate this, maintain the positive momentum. Especially with Ramadan coming, I believe there are many stimulus measures already provided by the government. We will continue to work with the private sector to strengthen purchasing power in our domestic market,” he explained.