Sri Mulyani Reveals Middle East Turbulence And Global Uncertainty Threatens National Economic Stability

Minister of Finance Sri Mulyani. (Photo: ANTARA)

Minister of Finance Sri Mulyani Indrawati said that she was also aware of the effects of the geopolitical conflict between Israel and Iran, which has the potential to have a direct impact on the Indonesian economy.

He explained, on the third day since the conflict in the Middle East erupted, world oil prices have surged by nearly 9 percent, from about $70 per barrel to $78 per barrel, although they have now started to experience corrections to the level of US$75 per barrel.

"This is something that always brings up an event or event that can directly affect the economic condition both through commodity prices and in terms of exchange rates, interest rates, and capital flow. This is what we will continue to face against geopolitical which is getting worse," he said at a press conference, Tuesday, June 17.

Sri Mulyani added that global uncertainty was also exacerbated by the fiscal condition of the United States, where amid geopolitical tensions and international trade, the US is proposing a fiscal policy to significantly enlarge the US budget deficit.

According to him, this resulted in market sentiment towards the fiscal policies of developed countries becoming negative and increasing the risk of fiscal and yield (yield) US government bonds (US Treasury/UST).

He assessed that the uncertainty of global trade and ongoing armed conflict has the potential to trigger a surge in commodity prices and supply chain disruptions.

According to Sri Mulyani, this condition poses various risks, including a decrease in export performance, an increase in commodity prices, exchange rate volatility, and an increase in the risk of debt securities interest rates, all of which occur amid the weakening of the global economy.

"It's a combination that we have to be aware of because it's not good for the weakening of the economy to have a bad impact, increase in inflation and then cause an increase in yield. Whether due to geopolitical or due to fiscal policy, these two things have an impact on the whole world, including Indonesia, this will also drive exchange rates and also global interest rates," he said.

Dalam situasi global yang penuh ketidakpastian dan moderasi harga komoditas, Sri Mulyani menegaskan bahwa kebijakan fiskal Indonesia akan tetap bersifat ekspansif dan pemerintah telah menyiapkan berbagai langkah, seperti pemberian restitusi untuk menjaga likuiditas dunia usaha, serta paket stimulus bagi UMKM, sektor padat karya, perumahan, dan otomotif.

In a global situation full of uncertainty and moderation of commodity prices, Sri Mulyani emphasized that Indonesia's fiscal policy will remain expansive and the government has prepared various steps, such as providing restitution to maintain the liquidity of the business world, as well as stimulus packages for MSMEs, labor-intensive, housing and automotive sectors.