War Concerns Eased as Indonesia's Economic Condition Remains Solid

Jakarta — The government has assured the public that Indonesia’s economic condition remains sound despite economic disturbances caused by the United States-Israel-Iran conflict.

The conflict has driven crude oil prices above $100 per barrel, raising concerns about potential global inflation, declining purchasing power, and economic crisis.

However, Coordinating Minister for Economic Affairs Airlangga Hartarto explained that macroeconomic indicators demonstrate that Indonesia remains robust.

Regarding consumer purchasing power, Hartarto noted that domestic consumption and the Mandiri Spending Index remain at healthy levels. “Our domestic consumption remains strong at 54% of GDP, and the Mandiri Spending Index has reached 360.7, which is high. When we look at markets or shopping malls, they are busy, and discount programmes in Indonesia continue to run. Furthermore, holiday bonuses have already been distributed, so consumer purchasing power appears solid,” he told media at the Coordinating Ministry for Economic Affairs office in Jakarta on Monday, 16 March 2026.

He emphasised that state debt stands at 40% of GDP, below the safe threshold of 60%. “Foreign debt accounts for 29.9%, and domestic debt for approximately 10%, so our total debt is 40%,” he said.

Hartarto also noted that Indonesia’s foreign exchange reserves remain sufficient to cover six months of imports. The manufacturing index was described as being at a high position of 53.8, indicating strong business confidence among manufacturing enterprises.

“The manufacturing sector is also performing well at 53.8. This is actually an all-time high, the highest level. This means manufacturers are optimistic with various agreements being signed, so they have high confidence in what the government is implementing,” said the Coordinating Minister.

Hartarto stated that the state budget (APBN) is functioning effectively as a shock absorber during the current global economic turbulence, through food assistance totalling 11.92 trillion rupiahs and the distribution of holiday bonuses to civil servants, military, and police, as well as transportation and fuel subsidies.

“Tax revenues per February grew strongly by 30.4 percent. This is also a good achievement, and the APBN deficit is controlled at 0.53 percent of GDP. In other words, macroeconomically, despite the wartime crisis situation, we remain strong and solid,” Hartarto added.

With what he regards as solid internal conditions, Hartarto remains confident that Indonesia’s economic growth can reach 5.5% in 2026. “With these figures, we are quite optimistic that growth could be around 5.5%.”