Authors: Chris Manning, ANU, and Raden M Purnagunawan, Padjadjaran University

Although there are some uncertainties, the Indonesian economy is well placed for what will now almost certainly be a sharp downturn in the world economy.

Foreign reserves were at a record high at just under US$120 billion at the end of the second quarter, inflation was down to below 5 per cent, investment up significantly, and growth steady at 6.5 per cent year on year. Certainly, macroeconomic policymakers are not ignoring the potential impact of another global recession; but Indonesia seems relatively unaffected by the immediate- to medium-term impacts of the US’s much slower-than-expected recovery in August and the ongoing debt crisis in Europe. Read more…