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Sri Mulyani Warns Of Impact Of Iran Vs Israel Conflict On Indonesian Economy

Finance Minister Sri Mulyani Indrawati said that the global situation that is still and increasingly uncertain should be watched out for. Developments in the world economy and the outbreak of war in the Middle East are considered to have an impact on the Indonesian economy. 

"This is something that gives rise to events, which can directly have a significant impact on economic conditions, both in terms of commodity prices, exchange rates, interest rates, and capital flows. This is what we are facing, facing increasingly acute geopolitics," she said in a press conference on the performance of the State Budget at her office, Jakarta, Tuesday, June 17, 2025. 

The uncertainty of the global situation began with the trade tariff policy issued by the United States which tends to be more oppressive towards China. Although there have been negotiation efforts between Uncle Sam's Country and the Bamboo Curtain Country, there have been no significant results from the discussion steps. 

The situation was then exacerbated by the outbreak of war in the Middle East between Israel and Iran. Sri Mulyani said that this condition had two immediate impacts on the world economy, including Indonesia. 

"Oil prices are rising, but on the other hand the global economy tends to weaken. That causes price pressures, rising inflation, and weakens the global economy. That's a combination that we must be aware of. It has an impact on the whole world, including Indonesia, moving global exchange rates and interest rates," he explained. 

The still high uncertainty is also reflected in the decline in economic performance in a number of developed countries. The world's manufacturing Purchasing Managers Index (PMI) was recorded in the contraction zone, namely 49.6, which is also the lowest since December 2024. Of the countries surveyed, 70 percent of them were known to have experienced a contraction in manufacturing PMI. 

"This means that the manufacturing PMI index is below 50, including Indonesia at 47.4. Only 29.2 percent of the countries surveyed are still expansive," explained Sri Mulyani. 

Tag: Global Situation Indonesian Economy Iran Vs Israel Conflict Sri Mulyani Indrawati