Global Conflict Between Iran and Israel Could Impact Jakarta’s Economy, Warns Acting Governor Heru

International Jakarta

JAKARTA, JAKTIMES.COM – Acting Governor of DKI Jakarta, Heru Budi Hartono, has cautioned that the ongoing global conflict between Iran and Israel could have repercussions on Jakarta’s economy. He emphasized the need for all levels of government to take precautionary measures in response.

Speaking at the Musyawarah Rencana Pembangunan (Musrenbang) RKDP 2025 and RPJMD 2025-2045 for DKI Jakarta at Balai Kota DKI, Jakarta Pusat, on Tuesday (23/4/2024), Heru highlighted that the Iran-Israel conflict, global economic slowdown, and the anticipated Fed Fund Rate (FFR) reduction in the second half of 2024 could affect Jakarta’s economic growth and inflation.

“In the upcoming year, our 2024 work plan must consider various global upheavals, such as the Iran-Israel conflict, which is expected to impact oil prices, global inflation, high-interest rates, rupiah depreciation, and capital outflows. We need to prepare mitigation strategies to minimize the impact on Jakarta’s economy,” said Heru in Jakarta.

Heru presented the economic challenges in the Rencana Kerja Pemerintah Daerah (RKPD) 2025 and Rencana Pembangunan Jangka Menengah Daerah (RPJMD) 2025-2045 discussions in Jakarta. He elaborated that the global upheavals would be transmitted through three channels: commodity prices affecting oil, natural gas, and food; financial channels related to capital flow; and trade channels impacting export and import performance.

Anticipating the impacts of these global disruptions is crucial, especially as Jakarta aims to become a global city after transitioning from its status as the national capital.

He also emphasized that 2024 is a significant year for Jakarta’s future as it marks the formulation of strategic planning documents. “The Musrenbang forum is crucial in realizing Jakarta as a competitive global city, and the drafting of strategic planning documents that will shape Jakarta’s future must be done meticulously,” Heru added.

Earlier, Coordinating Minister for Economic Affairs, Airlangga Hartarto, stated that the government is preparing strategic policies to ensure the Iran-Israel conflict does not significantly affect the national economy. Airlangga stressed that the government will continue to monitor global and regional developments and take appropriate measures to maintain financial stability.

He pointed out that Indonesia’s economy remains relatively robust with economic growth still above 5 percent and controlled inflation. As of February 2024, Indonesia’s trade balance remains in surplus, indicating strong foreign exchange reserves as of March 2024.

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