Government plans to closely monitor economic consequences of escalating tensions in the Middle East, says Economic Minister Airlangga.

The Indonesian government stated that it would evaluate the effects of the conflict escalation between Iran and Israel, ensuring that it would not react too quickly. During a press conference in his Jakarta office, Coordinating Economic Minister Airlangga Hartarto mentioned that Jakarta would closely monitor the situation for the next one to two months and refrain from immediate reactions to any further developments.

Airlangga explained that they have yet to discuss specific policies as they do not want to overreact since neither Iran nor Israel have taken any additional steps. Following Iran’s first direct attack on Israel in decades, several financial institutions have increased their forecasts for oil prices. It is expected that oil prices could rise to $90 per barrel in the short term from the current $80 per barrel, and it may even reach $100 per barrel if the situation escalates further.

Rising oil prices would result in a higher fuel subsidy in Indonesia, potentially requiring a recalibration of the state budget. Airlangga mentioned that Jakarta would carefully monitor the situation and make budgetary decisions based on how the situation unfolds.

Despite the potential economic impacts of the conflict escalation, Indonesia remains cautious and will proceed with evaluating the situation before making any significant budgetary adjustments. They understand the importance of keeping a close eye on the developments to make informed decisions.