Indonesia Strengthens Economic Stability Amidst Global Dynamics

Jakarta, June 3, 2024 – The Indonesian government continues to strengthen various efforts and strategies to maintain economic stability amidst global dynamics triggered by the heating geopolitical situation, especially in the Middle East region.

Deputy for Macroeconomic and Financial Coordination of the Ministry of Coordinating Economic Affairs, Ferry Irawan, revealed that the government's main focus is to monitor the economic conditions of the Middle East as one of the world's energy sources.

"In the face of global uncertainty, such as the conflict in the Middle East and other geopolitical tensions, the Indonesian government continues to monitor and respond to global economic dynamics. Mitigation steps are taken through synergy between institutions to respond with appropriate policies," said Ferry, quoted by VIVA English in the FMB9 Dialogue.

Ferry explained that the dynamics in the Middle East in recent times have had a significant impact on the global oil market. Soaring oil prices are often followed by an increase in the value of foreign currencies, which leads to inflation.

However, the current situation in Indonesia is considered quite good thanks to the natural resources it possesses. In April 2023, Indonesia's inflation fell to 2.8 percent, reflecting effective economic management. The government is targeting end-of-year inflation in the range of 2.5% ± 1 percent.

To ensure that export results from natural resources enter the domestic economy, the government has established an Export Proceeds (DHE) policy, in which 30 percent of export proceeds must be stored in domestic instruments. This step aims to strengthen economic resilience from external shocks.

The government is also continuing to push for structural reforms, improvements in licensing ease, and the provision of incentives to increase investment. Various energy subsidy policies are carried out to protect the public from the impact of inflation due to geopolitical dynamics, including providing social and food assistance.

Director General of Asia Pacific and Africa at the Ministry of Foreign Affairs, Abdul Kadir Jailani, assessed that the economic impact of the Middle East conflict is very significant. Therefore, Indonesia has a strategic interest in managing this crisis, not only from the solidarity side, but also to protect national interests.

The Indonesian government continues to actively encourage the cessation of violence in Gaza and the realization of assistance for the Gazan people affected by the conflict. These efforts are expected to create better stability in the Middle East region and have a positive impact on the global economy, including Indonesia.