OJK Claim Financial Sector is Stable Amid Global Tensions

Jakarta: Indonesia’s Financial Services Authority (OJK) said the country’s financial services sector remained stable through March 2026 despite geopolitical tensions involving Iran, the United States, and Israel.

“The OJK Board of Commissioners Meeting held on April 1, 2026, assessed that the stability of the financial services sector remains intact,” said OJK Board of Commissioners Chair Friderica Widyasari Dewi during a press conference in Jakarta, as quoted from Antara, on Monday April 6, 2026.

Dewi said the global economy had been projected to strengthen before the escalation of conflict involving Iran, the United States, and Israel. However, rising tensions in the Gulf region have since triggered higher energy prices and increased volatility in global markets.

“Heightened global uncertainty and energy price pressures have also narrowed the room for monetary policy among central banks, while reinforcing expectations of a ‘high-for-longer’ interest rate environment,” she said.

She added that the US economy is showing signs of strain amid persistent inflation and rising unemployment. While the Federal Reserve had previously signaled one rate cut in 2026, market expectations have now shifted toward no rate cuts following the escalation of the Iran conflict.

Meanwhile, China’s economy has performed above expectations, supported by improvements in both demand and supply, as well as stimulus measures for the financial sector. However, Beijing has lowered its growth targets due to structural challenges and ongoing external uncertainties.

On the domestic front, OJK reported that core inflation declined in March 2026, while consumption remained strong at the start of the year. Retail sales are projected to grow by 6.89 percent year-on-year, supported by solid motor vehicle sales.

The Manufacturing PMI remained in expansion territory, while foreign exchange reserves as of February 2026 were at adequate levels. Indonesia’s trade balance also continued to post a surplus.

OJK estimates that escalating tensions in the Middle East could increase transmission risks to the financial sector through three main channels: financial markets, rising energy prices, and direct exposure via trade and investment.

The regulator has urged domestic financial institutions to strengthen risk assessments by taking into account evolving global dynamics.