Chatib Basri: Indonesian Economy Will Not Collapse Like the 1998 Crisis

Senior Indonesian economist and former Finance Minister Chatib Basri has stated that the current economic pressures and the weakening of the rupiah will not lead Indonesia into a crisis similar to that of 1998. Speaking at the Grab Business Forum 2026 in Jakarta, he highlighted that the primary difference between the two periods is the flexible exchange rate regime.

He explained that the upper-middle class and corporations have long anticipated rupiah depreciation and have utilised hedging strategies, such as holding assets in US dollars. This contrasts sharply with 1998, when the lack of a flexible exchange rate meant that businesses borrowing in dollars while earning revenue in rupiah faced surging non-performing loans (NPL). Under the current foreign exchange regime, entities are able to make necessary adjustments.

However, Basri expressed concern regarding the lower-middle-income group. He noted that rising costs for essential commodities, such as wheat and soybeans, could lead to price hikes in staples like noodles, tofu, and tempeh. He emphasised that the government must prioritise social protection for this demographic to address these inflationary pressures.

Despite the fluctuations, Basri maintains that the current depreciation will not trigger a recession, noting that Indonesia’s growth remains positive. He argued that regardless of whether growth figures sit at 4.7% or 5.6%, any growth above zero is significant given the current global economic climate.

In related developments, the Deputy Minister of Cooperatives, Farida Farichah, stated the government’s commitment to using cooperatives as a primary instrument to achieve an 8% economic growth target. Meanwhile, Finance Minister Purbaya Yudhi Sadewa urged investors not to panic, reinforcing that the current economic landscape is fundamentally different from the 1998 monetary crisis.