Jakarta. In response to Iran's retaliatory attack on Israel, Chief Economic Affairs Minister Airlangga Hartarto announced President Joko "Jokowi" Widodo's plan to convene an internal meeting on Tuesday to address the issue. Airlangga made the statement following the Golkar Party's gathering event on Monday evening.

"The President will hold an internal meeting regarding this issue. We will prepare Indonesia's steps," Airlangga said after the Partai Golkar gathering event on Monday evening.

The Indonesian government has also engaged in discussions with ambassadors in Jordan, Tehran, and representatives of the Lebanese embassy.

Airlangga reassured the public about Indonesia's strong economic fundamentals and emphasized the importance of political and economic solidity for a smooth transition from the situation. He expressed hope for de-escalation measures by the United Nations Security Council.

However, experts warn that Indonesia's economy could slow down if the Middle East conflict worsens. Iran's recent missile strikes on Israel have heightened concerns about the economic impact, including on Indonesia. Earlier projections suggested Indonesia's economy could expand by 5.2 percent this year, but Senior Economist Bambang Brodjonegoro warned that any escalation in the Middle East conflict could lower growth to between 4.6 percent and 4.8 percent.

“If this escalation widens or takes longer than expected, even sparking uncertainty for many parties, it can be challenging for Indonesia’s economy to grow 5 percent,” Bambang told a virtual conference on Monday.

Bhima Yudhistira, Executive Director of the Center of Economic and Law Studies (Celios), outlined the consequences of the Iran-Israel conflict on Indonesia's economy. These include potential increases in crude oil prices, disruptions in foreign investment, depreciation of the rupiah exchange rate, and shifts in investment preferences towards safer assets like gold or the US dollar.

"The escalation in oil prices could widen energy subsidies, thereby leading to the depreciation of the rupiah exchange rate," explained Bhima Yudhistira on Sunday.

"Consequently, the rupiah may weaken to Rp 17,000 per US dollar, from the current level of Rp 15,000," he added.
 

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