The escalation of conflict in the Middle East could pose significant economic risks to Indonesia, according to experts and former government officials. These risks range from capital outflows to slower GDP growth.
In response to the heightened conflict, Finance Minister Sri Mulyani Indrawati held a meeting on Sunday to discuss the global economic and financial situation. Meanwhile, Coordinating Economic Minister Airlangga Hartarto emphasized that the government would not stand still in the face of these risks. He urged market players to remain calm and refrain from taking speculative steps, stressing the importance of maintaining market trust in Indonesia.
The recent military strike by Iran on Israel marked the first direct attack Iran has launched on Israel in their decades-long contestation. This strike has put additional pressure on an already tense region, which could have far-reaching implications for Indonesia’s economy.
Former Finance Minister Bambang Brodjonegoro predicted that if further escalation occurred, Indonesia’s economic growth this year could end up between 4.6 and 4.8 percent, falling short of the government’s target of 5.2 percent. If the escalation becomes more severe and prolonged, achieving the 5 percent target would be challenging, he added.
With exclusive interviews and in-depth coverage of Indonesia’s most pressing business issues, “Prospects” is a must-read for staying ahead of the curve in Indonesia’s rapidly evolving business landscape. Sign up for our newsletter today to stay up-to-date with the latest news and insights from this dynamic region.
