Indonesia: Trade buffers against Oil shock – DBS

FXStreet Insights Team FXStreet

DBS Group Research economists Radhika Rao and Chua Han Teng argue that Indonesia’s growth outlook remains intact despite Middle East tensions. They highlight negligible trade exposure to Iran, diversified links with Gulf economies and net commodity exporter status.

Limited growth hit and economic buffers

"Despite recent tensions, the direct impact on Indonesia’s trade and economic growth appears marginal at this juncture."

"Indonesia’s trade exposure to Iran has been negligible over the past six years, and while total trade with the broader Gulf region reached $17.8bn (3.4% of total) in 2025, the existing economic buffers are significant."

"Indonesia is currently strengthening these ties through existing agreements, as well as ongoing Comprehensive Economic Partnership Agreement negotiations with the other countries in that region (Kuwait, Bahrain, Oman, and Qatar)."

"Indonesia is a net oil importer, but also a net commodity exporter, which suggests that any negative impact on the trade balance can be averted if the broader metals/minerals universe also remains firm."

"We maintain our current economic forecasts, as the structural shift in energy subsidies (0.8% of GDP last year) provide a much-needed cushion against external volatility."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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