UGM Economist Warns of Long-Term Impact of Middle East Conflict; Government Must 'Tighten Belts'

YOGYAKARTA — The conflict raging in the Middle East following Israeli-American attacks on Iran is expected to have consequences for the global economy. The Indonesian government must prepare for this scenario, including through implementing fiscal tightening measures.

Rimawan Pradiptyo, an economist from Universitas Gadjah Mada (UGM), assessed Iran’s history of conflicts. According to him, Iran has the capacity to wage war for years, and this is not the first time the country has faced such a conflict. Therefore, Rimawan believes that the current conflict could be prolonged with far-reaching consequences.

Moreover, Iran has launched retaliatory strikes following the death of Ali Khamenei, intensifying the conflict further. These retaliatory operations have also reportedly reached several Gulf nations, targeting US installations.

“I believe this will be lengthy. The impact will be long-term and far-reaching. That is the problem,” Rimawan said when met at UGM’s Balairung, Monday evening (2 March 2026).

From an economic perspective, Rimawan assessed that the conflict has the potential to disrupt global oil supplies. Additionally, various business sectors could be affected, including hajj services. He emphasised that the government needs to be cautious in evaluating the various possible impacts of the conflict.

“We do not yet know the full extent of the impact. But for the government, it is important to be careful in assessing the various possible consequences of the war itself,” he said.

“Currently, the economy is actually still contracting. That the global economy will become more difficult than before, yes. Certainly. Whether it will reach recession levels, I cannot yet say,” he stated.