Indonesian Economy Far from 1998 Crisis, Analyst Asserts

An analyst has asserted that the current economic condition in Indonesia is significantly different from the crisis that gripped the nation in 1998, dismissing narratives that link the rupiah's weakening to a potential "Reformasi Jilid II" (Second Reformation).

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Scientifically, the conditions in 2026 cannot be equated with the severe crisis of 1998.

Kristian Widya Wicaksono, a political analyst from Parahyangan University (Unpar) in Bandung, stated that comparing the present situation to the 1998 crisis is scientifically inaccurate based on various economic indicators and national political conditions. "Scientifically, the conditions in 2026 cannot be equated with the severe crisis of 1998," Kristian said on Friday (June 12, 2026).

He acknowledged that Indonesia is facing economic pressure due to global uncertainty but emphasized that these pressures have not reached the level of a systemic crisis seen at the end of the New Order era. "Indonesia is currently in a phase of severe economic stress, but has not entered a phase of macroeconomic collapse like in 1998," he explained. Kristian detailed that the 1998 crisis was triggered by a confluence of issues, including the collapse of the financial system, soaring inflation, widespread layoffs, and a decline in public trust in state institutions. "In 1998, Indonesia experienced a systemic crisis with economic contraction reaching 10-15 percent and inflation exceeding 80 percent," he noted.

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Indonesia is currently in a phase of severe economic stress, but has not entered a phase of macroeconomic collapse like in 1998.

Kristian believes that current conditions are more stable because the government and economic authorities possess stronger instruments to maintain national stability. "Current macroeconomic conditions show better resilience. Bank Indonesia still reports a sustained trade surplus and inflation that remains relatively controlled within target ranges, despite increasing pressures," he said. Recent data also indicates continued positive economic growth, with the Central Statistics Agency (BPS) recording a 5.61 percent year-on-year growth in the first quarter of 2026, the highest first-quarter growth in over three years. Annual inflation in May 2026 was reported at 3.08 percent, significantly lower than the over 80 percent inflation during the 1998 crisis.

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In 1998, Indonesia experienced a systemic crisis with economic contraction reaching 10-15 percent and inflation exceeding 80 percent.

Therefore, Kristian urged the public not to be swayed by narratives equating the current weakening of the rupiah with the situation preceding the 1998 Reformation. He stressed the importance of viewing economic developments holistically, based on available data and indicators. He warned that the spread of unsubstantiated narratives could create excessive public anxiety and negatively impact perceptions of the national economy. Kristian concluded that Indonesia's economic foundation is currently stronger than it was before the 1998 crisis.

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Current macroeconomic conditions show better resilience. Bank Indonesia still reports a sustained trade surplus and inflation that remains relatively controlled within target ranges, despite increasing pressures.