Indonesia's Economic Resilience Assessment During Israel-Iran Conflict and Global Financial System Crisis
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This study evaluates Indonesia's economic resilience and financial stability amid the 2025 global crisis precipitated by the Israel-Iran conflict. Brent crude prices surged over 7% to USD 78.50 per barrel, driven by airstrikes on Iran's energy infrastructure and Strait of Hormuz disruptions. Maritime rerouting increased logistics costs by 20% and insurance premiums by 60%. Despite external shocks, Indonesia demonstrated resilience with Q1 2025 GDP growth of 4.87% year-on-year, supported by 6.78% non-oil export growth. Banking stability remained strong with Liquidity Coverage Ratio at 192.41%, Liquid Assets to Non-Core Deposits at 110.33%, and Capital Adequacy Ratio at 25.51%. Non-performing loans stayed controlled at 2.29% gross and 0.85% net. Effective monetary and fiscal policies, including 5.25% BI rate, stabilized the rupiah at IDR 15,000/USD and contained inflation at 1.87%. The study employs Minsky's Financial Instability Hypothesis, Hamilton's Oil Price Shocks Theory, and Geopolitical Risk Index, recommending VAR-SVECM and multivariate GARCH stress testing.
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