Up to September 2008, Indonesia’s was economy still showing some resilience towards the global financial crisis already underway in the world’s most powerful economies. However, during the October-December 2008 period, the country’s economy experienced deteriorating economic performance at an unprecedented speed; quarterly economic growth fell from 6.1% to 5.2% on a yearly basis and export growth was at only 1.82%, the slowest since 1986. With downward revision to the country’s economic growth in 2009 to 4-4.7% (previously 5% in 2008), the government plans a fiscal stimulus package to maintain private consumption levels to cushion the impact of the global financial crisis, as domestic consumption has contributed a significant share (65%) of Indonesia’s gross domestic product (GDP). Policies to keep financial market stability are also being launched, particularly to keep inflationary pressures down and prevent depleted domestic purchasing power. Unemployment and poverty reduction will be affected, but not as severely as in 1997-1998, owing to the existence of favourable factors such as relatively low fuel and commodity prices and a good rainy season so far.
Ira S Titiheruw, Hadi Soesastro and Raymond Atje