How US-Israel’s War on Iran May Impact Indonesia’s Economy?

Rising tensions between the United States, Israel, and Iran have pushed global oil prices higher, posing significant risks for Indonesia’s economy. As a net importer of crude oil and fuels, Indonesia faces potential fiscal pressure if prices rise to $100–$120 per barrel, with subsidy and compensation costs possibly exceeding Rp500 trillion in 2026. Higher energy prices could weaken the rupiah, increase import costs, and fuel inflation, particularly for food and transport. Monetary tightening may follow if inflation accelerates, dampening investment and growth. To mitigate these risks, policymakers need stronger fiscal buffers, subsidy reform, diversified energy imports, and expanded strategic reserves.

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