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Govt to closely monitor economic impacts of MidEast escalation: Airlangga
An escalation of the conflict could send the oil price up, which could then lead to higher energy subsidy spending.
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Coordinating Economic Minister Airlangga Hartarto speaks before the press on Apr. 16, 2024, about government's economic stand on the Iran-Israel conflict, in his Jakarta office. (JP/Deni Ghifari)
T
he Indonesian government said it would assess the impacts of the escalation between Iran and Israel, assuring that it would not react too hastily.
Speaking during a press conference held in his Jakarta office on Tuesday, Coordinating Economic Minister Airlangga Hartarto said Jakarta would be on its toes for the next one to two months, should any further escalation play out.
“As of yet, we still haven’t discussed [specific policies] because we should not overreact. We know that neither Iran nor Israel have taken any [further steps],” Airlangga said.
Several financial institutions have raised their forecasts for oil prices following Iran’s first direct attack to Israel in decades with many expecting it to rise to around US$90 per barrel for the short term from around $80 per barrel. The oil price could reach $100 per barrel if there is further escalation, according to Reuters.
Read also: Mideast escalation could pose major economic risk to RI
An increase in oil prices would translate into a more expansive fuel subsidy in Indonesia. Airlangga said recalibrating the state budget would be necessary if the oil price did shoot up.
However, he emphasized that Jakarta would be careful and would see how the situation develops before making any budgetary decision.
