March 31, 2026 | 02:26 pm
TEMPO.CO, Jakarta - Organization for Economic Cooperation and Development (OECD) has revised its economic projection for Indonesia, with economic growth expected to park at 4.8 percent in 2026, down from the 5 percent forecast it released in December last year.
The projection cut occurs amidst escalating conflicts in the Middle East. OECD also raised Indonesia's inflation rate forecast to 3.4 percent from the previous 3.1 percent.
The report titled OECD Economic Outlook, Interim Report March 2026: Testing Resilience also highlights disruptions in the Strait of Hormuz, which has triggered a surge in energy prices and disrupted the global supply of energy and other essential commodities.
"The resilience of the global economy is now being tested by the escalating conflict in the Middle East. The breadth and duration of the conflict remain very uncertain, but measures of geopolitical risk have spiked notably and there have been marked effects on energy markets," wrote the report cited by Tempo on Tuesday, March 31, 2026.
According to OECD, massive disruptions in the global energy and commodity markets have caused price surges and increased volatility in financial markets. "If it persists, the conflict will weigh on global growth and push up inflation."
The extent and duration of the conflict are highly uncertain, but prolonged higher energy prices will significantly increase operating costs and raise consumer price inflation. Ultimately, this will have negative consequences for growth
Before the conflict escalated, OECD stated that global growth remained robust. Private consumption and investment were the main drivers in many countries. Financial and fiscal conditions also supported this, along with an increased demand for artificial intelligence technology.
Not only in Indonesia, but OECD also cuts the prospect of global economic growth this year to 2.9 percent, a slowdown from last year's 3.3 percent. Meanwhile, the economies of G20 countries are predicted to grow by 3.0 percent, down from the previous 3.3 percent.
Read: Indonesian Gov't Urged to Mitigate Post-Eid Economic Challenges
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