The Indonesian Experience with Two Big Economic Crises

Abstract

This paper aims to examine the Indonesian experience with two big economic crises in the past 12 years, namely the 1997/98 Asian financial crisis and the 2008/09 global economic crisis. The paper is based on secondary data analysis and a review of key literature. It has two main parts. The first part gives a theoretical explanation of the main transmission channels through which the two crises have affected the Indonesian economy. The second part is the empirical part of the paper about the impacts of the crises on such as economic growth, employment, remittances and poverty in Indonesia. One important finding from this study is that the Indonesian economy was much more resilience to the last crisis as compared to the 1997/98 crisis. During this first crisis, Indonesian economic growth was–13 percent and poverty increased significantly; whereas during the second one, Indonesia managed to keep a positive economic growth rate (though declined), and poverty kept declining.