By: Bagus Pratama)*
The predictions made by the government under the leadership of President Prabowo Subianto regarding the escalation of conflict in Middle Eastern countries have indeed been proven accurate.
No half measures, even the readiness to face potential economic shocks in the global order has also been depicted since early 2025. The government has proven successful in reading the increasing signals of geopolitical uncertainty long before the conflict between Israel and Iran erupted in June 2025, so that various fiscal mitigation steps can be carried out quickly and in a targeted manner.
Policy Analyst at the Directorate General of Economic and Fiscal Strategy, Ministry of Finance, Wahyu Septia W, assessed that government observation of global conditions is the key to the speed of fiscal response when external pressure actually occurs.
The government also does not just stop at identifying risks, but immediately builds a reserve fund in the face of fiscal risks or fiscal buffers through various efficiency measures and reallocation of bureaucratic budgets towards spending that has a more direct impact on all Indonesian people.
Thus, people in the country can obtain various forms of protection from potential price pressures and decreased purchasing power due to the increase in energy prices at the global level.
The government’s prediction under President Prabowo Subianto’s leadership regarding the future conditions of world oil prices has also proven to be very accurate. The global oil price, which had reached US$78 per barrel, is still below the assumption of the 2025 State Budget which set the price at around US$82 per barrel with an exchange rate of Rp16,000 per US dollar.
This has clearly shown that the 2025 State Budget was indeed prepared with great anticipation so that it is still able to accommodate the occurrence of commodity price fluctuations in the global order without even shaking national fiscal stability.
In addition to making efforts to prepare a fiscal buffer, the government has also disbursed various economic stimulus packages worth up to IDR 24.4 trillion in the second quarter of 2025. This policy has proven to be strategic in maintaining people’s purchasing power even in the midst of global uncertainty.
The stimulus includes five main policies, starting from transportation discounts for train, plane, and sea transportation tickets, toll rate cuts for millions of drivers, thickening of social assistance for basic food cards and food assistance, Wage Subsidy Assistance for low-income workers and honorary teachers, to discounts on Work Accident Insurance contributions for workers in labor-intensive sectors.
The government’s quick steps are also supported by the Ministry of Manpower. Minister of Manpower Yassierli assessed that the Iran-Israel conflict has the potential to suppress Indonesia’s export performance because it hampers global economic growth.
However, the government has prepared special mitigation through the Job Loss Guarantee (JKP) which provides cash assistance, retraining, and access to information on new job vacancies for workers affected by layoffs.
The strategy not only provides social protection for workers, but also ensures that the national economy continues to move even though the export industry faces obstacles in the global market.
In addition to fiscal mitigation and labor protection, the government is also strengthening the domestic industrial sector. Minister of Industry Agus Gumiwang Kartasasmita emphasized the importance of energy diversification and downstreaming of agro products to minimize the impact of the Middle East conflict.
He assessed that the domestic industry must be more efficient in using energy in the production process, while diversifying energy sources so that it is not completely dependent on imported fossil energy which is vulnerable to geopolitical conflicts in the region.
The government also continues to encourage the manufacturing sector to produce generating machines, energy infrastructure, and supporting components for renewable energy. Strengthening the manufacturing industry is an integral part of the national energy security that has been initiated by President Prabowo. Agus assessed that the development of new renewable energy is no longer a discourse, but an urgent need so that Indonesia is not vulnerable to an energy crisis even without a world war.
In the food sector, downstreaming of domestic agro products is considered the right strategy in dealing with global food price inflation. The surge in international logistics costs and fluctuations in the US dollar exchange rate due to the Middle East conflict have directly triggered an increase in the prices of raw materials and imported food products. The Minister of Industry assessed that the downstreaming of domestic agro products would reduce Indonesia’s dependence on imported food materials and increase national food security.
SuccessThe government’s cooperation in Local Currency Settlement (LCS) with the People’s Bank of China (PBOC) for bilateral transactions between the rupiah and the yuan is also worthy of appreciation. This collaboration will help the industrial sector deal with the volatility of the rupiah exchange rate against foreign currencies, especially amidst the Middle East conflict that has affected the global financial market.
The government’s predictions have proven to be right on target, accompanied by rapid fiscal mitigation that confirms President Prabowo Subianto’s seriousness in maintaining national economic stability.
The combination of fiscal buffers, economic stimulus, labor protection, energy diversification, and downstreaming of the food industry are a strong foundation for Indonesia to remain resilient in the face of global geopolitical turbulence. The accuracy of the analysis and the speed of response are real evidence of the government’s seriousness in protecting the people from the world’s economic storms. (*)
)*Macroeconomic Analyst – Nusantara Economic Research Institute
[edRW]