Subsidies, tech boom cushion Asia oil shock

Indonesia’s ability to contain the impact of higher oil prices reflects the importance of timely policy buffers, but short-term resilience should not replace structural reform. From IBC’s perspective, fuel subsidies can help protect households and businesses while giving the economy time to adjust. That time should be used to improve subsidy targeting, preserve fiscal space, and accelerate energy diversification. The Middle East crisis also reinforces the need to reduce dependence on imported oil and strengthen Indonesia’s role in regional energy security through renewables, biofuels, critical minerals, processing, and cross-border connectivity. Continued volatility should remain the base case over the coming months.