Jakarta, 2 March 2026 - Escalating military confrontation between the United States and Iran has moved geopolitical risk from prolonged tension into active conflict. Following large-scale joint US–Israel strikes on Iranian military and suspected nuclear facilities, and Iran’s retaliatory missile and drone attacks on US bases in the Gulf, the probability of sustained regional instability has increased. While much of the immediate global focus remains on oil supply and inflation, the economic consequences extend beyond energy markets. Financial markets, investor behavior, and even religious travel activity may feel the spillover effects if tensions persist or broaden.
From a capital market perspective, Prasasti assesses that heightened geopolitical volatility does not automatically translate into uncontrolled capital flight. Market reactions depend on the duration and scale of escalation, particularly if the conflict spreads to strategic areas such as the Strait of Hormuz. Foreign ownership in Indonesian financial markets has already adjusted in recent periods, which may reduce the risk of abrupt, large-scale outflows compared to previous global stress episodes. Periods of uncertainty can also create selective entry opportunities as investors reprice assets. However, resilience remains conditional. If regional escalation intensifies—through proxy involvement or direct threats to Gulf states hosting US bases—global risk aversion could rise more sharply, placing renewed pressure on emerging markets. Indonesia’s relatively strong domestic demand base provides some cushioning compared to more export-dependent economies, but insulation is not immunity.
Beyond financial markets, prolonged instability in the Middle East could affect sectors tied to international mobility, particularly Umrah and Hajj travel. Escalation in the region increases the risk of airspace disruptions, operational constraints, or higher aviation insurance premiums affecting routes to destinations such as Jeddah. Even without formal travel restrictions, elevated security risks may influence consumer confidence and travel decisions. A sustained decline in pilgrimage flows would not only affect travel agencies, but also hotels, logistics providers, catering services, and other supporting industries linked to outbound religious travel. The economic footprint of these activities is significant enough to create secondary ripple effects if disruptions persist.
The broader concern lies in transmission mechanisms rather than a single shock. Financial volatility, higher geopolitical risk premiums, potential mobility disruptions, and rising logistical costs can interact and reinforce one another. In this environment, the durability of economic stability depends less on geographic proximity to the conflict and more on the strength of domestic fundamentals and policy credibility. Prasasti emphasizes the importance of anticipatory, scenario-based policy responses that account for cross-sector vulnerabilities. In periods of prolonged geopolitical uncertainty, measured coordination and preparedness are essential to prevent external turbulence from evolving into sustained domestic economic strain.