By: Agus Soepomo
The spread of hoaxes and provocation efforts related to Indonesia’s economic conditions are increasingly rampant. These baseless issues have the potential to create panic among the public, even though data shows that national economic indicators are in positive condition.
Various irresponsible parties often use the fluctuation of the rupiah exchange rate as a tool to spread fear, as if the Indonesian economy is on the verge of crisis. In fact, based on key economic indicators, the national fiscal and economic conditions remain strong and stable.
Finance Minister Sri Mulyani Indrawati asserted that Indonesia’s current economic and fiscal conditions are showing a good trend. Several macroeconomic indicators confirm that the national economic fundamentals are still strong.
Indonesia’s manufacturing Purchasing Managers’ Index (PMI) as of February this year was recorded at 53.6, up 1.7 points compared to the previous month. A PMI above 50 indicates expansionary conditions in the manufacturing sector, reflecting increased industrial activity. In addition, Indonesia’s trade balance also continues to experience a surplus, strengthening the resilience of the national economy in facing global challenges.
The dynamics of the rupiah exchange rate that has fluctuated have also received attention from the Coordinating Minister for Economic Affairs Airlangga Hartarto. According to him, although the rupiah exchange rate has been under pressure in recent times, the economic fundamentals remain strong thanks to export growth, solid foreign exchange reserves, and a trade balance that shows a positive trend in the medium to long term.
The government has implemented new regulations related to Export Proceeds (DHE) to increase state revenues and strengthen the rupiah exchange rate in the long term. In addition, the licensing deregulation implemented is expected to facilitate import and export activities so that the economy continues to grow sustainably.
Concerns about the possibility of a repeat of the 1998 monetary crisis have resurfaced as the rupiah weakened against the US dollar. The rupiah exchange rate reached Rp16,611 per USD, causing anxiety among the public.
However, Bank Indonesia emphasized that the current conditions are very different from the situation in 1998. Head of the BI Macroprudential Policy Department, Solikin M. Juhtegaro, emphasized that Indonesia’s economic fundamentals are much better compared to the crisis period.
The national economy is still growing at 5.02% throughout 2024, with inflation maintained at 1.57% year-on-year. Compared to other countries, such as Vietnam and India, which despite having high economic growth but experiencing higher inflation, Indonesia remains in a more stable position.
In terms of foreign debt, Indonesia has a debt to Gross Domestic Product (GDP) ratio of 30%, much lower than Malaysia’s 69%. This shows that Indonesia has much better economic resilience compared to the monetary crisis two decades ago.
Global geopolitical tensions and tariff policies implemented by the United States have also put pressure on international financial markets, which has an impact on the rupiah exchange rate. However, the current weakening of the rupiah is not an indication of a weakening of the Indonesian economy as a whole. Bank Indonesia continues to take strategic steps to maintain economic stability and ensure that economic fundamentals remain strong. With the various policies implemented, Indonesia is in a better position to face global challenges.
In addition to global factors, domestic political sentiment also influences the movement of the rupiah exchange rate. Ahead of the government transition, uncertainty in the financial market often causes volatility in the exchange rate. However, with sustainable economic policies, macroeconomic stability can be maintained.
On the other hand, the tourism and investment sectors are also factors that contribute to Indonesia’s economic resilience. With the recovery of tourism after the pandemic and increased investment in strategic sectors, the national economy is increasingly solid. The government also continues to encourage increased foreign direct investment (FDI) which is expected to increase employment and economic growth sustainably.
The domestic financial market is indeed under pressure due to external factors, but mitigation measures taken by the government and monetary authorities have proven their effectiveness in maintaining economic stability. The government also continues to strive to expand the digital economic base as one of the strategies to increase national competitiveness amid rapid global changes.
The public needs to be aware of hoaxes and provocations that spread negative narratives without a clear basis. Panic arising from inaccurate information can actually hinder national economic growth. Therefore, it is important for the public to always refer to official data and reliable reports in understanding the country’s economic conditions.
With various economic indicators showing a positive trend, the public is urged not to be provoked by misleading narratives. The Indonesian economy is currently in a much better condition compared to the previous crisis era.
The policy measures implemented by the government aim to maintain stability and ensure sustainable economic growth. Therefore, it is important to be critical of the information circulating and to adhere to valid data in understanding the national economic conditions. (*)
*) Economic Policy Consultant – People’s Economic Forum
