Jakarta. A surge in oil prices back above $100 per barrel, coupled with a weakening rupiah and rising industrial costs, is putting Indonesia’s economy under mounting pressure amid escalating global tensions.

Josua Pardede, chief economist at Permata Bank, said the pressure is being transmitted through energy and financial channels, particularly oil prices and the exchange rate. Oil climbing back above $100 per barrel has added uncertainty, while the rupiah recently weakened past Rp 17,300 per dollar.

Still, he stressed that the depreciation is not fully driven by domestic factors.

“The rupiah is not weakening because of its fundamentals. If we look at our estimates, its fair value is still below Rp 17,000. So what we are seeing now is largely driven by sentiment, not fundamentals,” he said at The Forum discussion hosted by B Universe in Jakarta on Tuesday.

That combination of higher energy prices and a weaker rupiah creates what economists refer to as imported inflation, where rising global costs are transmitted into domestic prices.

“Once energy prices rise and the rupiah weakens, it becomes a dual shock. Prices of goods, especially those relying on imported inputs, will be transmitted into the domestic economy,” Josua said.

The impact is already being felt at the industry level, where energy accounts for roughly 15% of input costs across many manufacturing sectors, making them particularly exposed to rising global prices. Petrochemicals are among the hardest hit, as higher crude derivatives such as naphtha push up the cost of plastics and packaging, key inputs across consumer industries.

“We are already seeing indications that production costs are increasing. For example, plastic prices are rising, and this is starting to affect packaging and even snack prices in stores,” he said.

Christina Ruth Elisabeth, an international trade economist at University of Indonesia, said the shock is also playing out through global supply chains, with broad-based price increases across commodities. She pointed to sharp increases in energy and input costs, including oil, gas, and fertilizer, which could spill over into multiple sectors, including agriculture.

“If the conflict continues, there is a risk that we could face stagflation globally, where growth slows while inflation rises,” she said.

On the policy front, the government is seeking to contain the impact, particularly by maintaining subsidized fuel prices to protect household consumption. Josua said the government still has fiscal space to absorb higher energy costs, supported by remaining budget buffers.

“The government has indicated that subsidized fuel prices can still be maintained, partly because there is a fiscal buffer that can absorb the additional subsidy burden,” he said.

He added that risks could intensify if current pressures persist.

“If high oil prices and a weak rupiah continue, production costs will rise further. This could affect corporate margins and, eventually, investment decisions,” Josua said.