Indonesia's Finance Minister Confident of 6% Growth Despite Rising Oil Prices

Indonesia's Finance Minister Purbaya Yudhi Sadewa expressed confidence that the country's economy can achieve robust growth of around 6% despite surging global oil prices, citing the government budget's role as a shock absorber for external shocks. Speaking at the CNBC Indonesia Economic Update 2026 on June 23, Sadewa explained that by absorbing the negative impact of rising global oil prices through the state budget, the government has managed to protect household purchasing power and maintain consumer spending throughout the first five months of 2026.

Sadewa acknowledged initial concerns about public perception of the economy following complaints on social media, but confirmed that macroeconomic conditions are not as dire as portrayed online. According to official data, Indonesia's first-quarter 2026 economic growth reached 5.61%, with inflation at 3.08%. Multiple economic indicators point to resilience, including steady bank credit growth, motor vehicle sales, cement consumption, and household spending indices that demonstrate sustained economic momentum.

The optimism comes amid significant volatility in global crude oil markets. World oil prices, including Indonesia's crude price (ICP), have surged since late February 2026 due to geopolitical tensions between Iran, the United States, and Israel, culminating in the closure of the Strait of Hormuz—a critical global oil trade route. Indonesia's crude price climbed 65% from January 2026 (US$64.41 per barrel) to May 2026 (US$106.56 per barrel), with a peak in April at US$117.31 per barrel. The five-month average ICP reached US$91.86 per barrel.

While rising oil prices have increased the cost of non-subsidized fuel products such as RON 92, RON 95, and RON 98 gasoline, the government has refrained from raising subsidized fuel prices for RON 90 Pertalite, which is widely used by consumers and the transport and logistics sectors. Sadewa projected second-quarter 2026 growth at approximately 5.7%, supported by continued domestic consumption and investment activity despite external headwinds.