Economic Policies of Indonesia

In the 1960s, Indonesia was led by a young and inexperienced government which caused the economy to deteriorate drastically and resulted in severe poverty and hunger. And when Sukarno’s downfall occurred, the economy was in chaos with 1000% annual inflation, shrinking export revenues, crumbling infrastructure, etc. However, the New Order administration soon brought a degree of discipline to economic policy and quickly brought down inflation, stabilized the currency, rescheduled foreign debt, and also attracted foreign aid and investment. In the late 1980s, a number of economic reforms were introduced to improves export competitiveness, de-regulate the financial sector, etc. And because of these reforms, foreign investment came into Indonesia which lead to an average of over 7% growth of the Indonesian economy. However not long after, the Asian Financial Crisis began to affect Indonesia’s economy during mid-1997.  The effects of the crisis were severe and the rupiah value had fallen from 2,600/USD1 to 11,000/USD1. After Suharto’s rule in Indonesia, the economic outlook was more positive and economic growth accelerated. And after the election of president Susilo Bambang Yudhoyono, Indonesia’s economic growth accelerated and reduced poverty rates in the country. Indonesia is now currently the third fastest growing economy in the group of 20 industrialized and developing economies.