By: Asep Faturahman )*
The conflict between the United States (US), Israel, and Iran has created new dynamics in the global economy. These geopolitical tensions are projected to exert pressure on several Indonesian macroeconomic indicators, including inflation, the rupiah exchange rate, the fiscal sector, and foreign trade performance. The government has responded to this situation by strengthening its fiscal strategy to maintain national economic resilience amidst global uncertainty.
The Head of the Center for Macroeconomics and Finance at Indef, M. Rizal Taufikurahman, stated that the escalating conflict in the Middle East is not merely a regional issue, but rather an external shock that directly impacts developing countries like Indonesia. In a climate of increasing global risk, investor behavior tends to shift toward risk aversion, or risk-off. Global portfolio funds typically shift from emerging markets to assets perceived as safer.
These changes in capital flows have the potential to depress the rupiah exchange rate and drive up yields on Government Securities (SBN). Furthermore, the country risk premium could also increase as market perceptions of global stability worsen. However, the emerging pressures are driven more by global risk sentiment and perceptions than by sudden changes in Indonesia’s domestic fundamentals.
From a fiscal perspective, the impact of the conflict is reflected in the energy sector. As a net oil importer, Indonesia faces the potential for a widening oil and gas trade deficit if global oil prices rise. Rising global energy prices also require greater foreign exchange to finance imports. Under these conditions, the government faces the challenge of maintaining stable domestic fuel prices to control inflation and maintain public purchasing power.
Consequently, the state budget (APBN) must act as a primary buffer. Fiscal space must be carefully managed to mitigate price fluctuations without compromising macroeconomic stability. State spending priorities should be directed toward price stabilization and public protection, rather than aggressive economic expansion.
Pressure on the rupiah exchange rate also comes from two sides simultaneously. First, capital outflows due to global portfolio shifts toward the US dollar. Second, increased domestic demand for foreign currency to finance energy and raw material imports. This combination of external and domestic factors demands solid policy coordination between fiscal and monetary authorities.
In this context, Bank Indonesia tends to be more cautious in determining the direction of interest rates. Exchange rate stability and inflation control are short-term priorities to maintain market confidence. Synergy between fiscal and monetary policies is a crucial foundation for maintaining national economic resilience in the face of global pressures.
In the foreign trade sector, the impact is potentially asymmetric. Rising energy prices will almost certainly increase imports, while export increases are unlikely if global economic growth weakens due to conflict. The risk of a narrowing trade balance also needs to be anticipated, particularly for the manufacturing industry, which faces rising production costs and potential delays in new investment.
In response to these challenges, the government is strengthening the role of the state budget (APBN) as a shock absorber. Coordinating Ministry for Economic Affairs Spokesperson Haryo Limanseto stated that coordination with the Ministry of Finance is ongoing to ensure fiscal policy can mitigate the transmission of global shocks, particularly in the energy and food sectors. The primary focus of the policy is maintaining public purchasing power amid fluctuating global commodity prices.
Concrete steps taken include accelerating the distribution of food aid to millions of beneficiary families. Rice and cooking oil distribution is being carried out to ensure stable household consumption. Furthermore, the momentum of the National Religious Holiday of Eid al-Fitr 1447 H/2026 AD is being utilized to strengthen the domestic economic cushion through policies that encourage consumption.
Close coordination with Bank Indonesia is also being maintained to maintain rupiah stability. Indonesia’s foreign exchange reserves, at US$154.6 billion as of January 2026, are considered adequate as an instrument for exchange rate stabilization. Strong external resilience provides the authorities with the capacity to manage market volatility in a measured manner.
On the energy supply side, Pertamina ensures the availability of national fuel and LPG stocks, particularly during Ramadan and Eid al-Fitr. Previous experience has provided the basis for developing alternative shipping routes to maintain a smooth oil supply chain. This anticipatory measure is crucial to maintaining domestic energy price stability amidst global dynamics.
Overall, the government’s fiscal strategy is focused on three main pillars: maintaining price stability, protecting public purchasing power, and maintaining market confidence. This approach demonstrates that policy responses are not merely reactive but also measured and coordinated across institutions.
National economic resilience in the face of geopolitical risks is largely determined by the strength of domestic fundamentals and the effectiveness of policies. With synergy between fiscal and monetary policies, a strengthened social safety net, and prudent energy management, Indonesia has a solid foundation to mitigate external impacts.
Amid escalating global conflict, an adaptive and responsive fiscal strategy is a key instrument for maintaining stability and sustainable growth. The government continues to closely monitor developments in the international situation and prepares the necessary follow-up measures to ensure the national economy remains resilient, stable, and competitive.
)* The author is a Bandung student living in Garut
