Controversy over Indonesia's Economic Recession: Government and Economists Differ in Views
JAKARTA, KOMPAS.com - The debate regarding the potential economic recession in Indonesia has intensified after economist Ferry Latuhihin criticised the government’s analysis, while Finance Minister Purbaya Yudhi Sadewa refuted predictions of economic weakening.
Ferry believes that the indicators used by the government are not yet appropriate for reading the future direction of the economy, including in assessing recession risks.
According to him, indicators such as the Composite Stock Price Index (IHSG), government bond yields, the movement of the rupiah exchange rate against the US dollar, property construction permits, automotive sales, banking credit growth, tax receipts, and the state budget deficit are more relevant to use as references.
“The PMI is a current economic indicator, not a leading indicator. Purbaya going to the market shows that he does not understand the data,” Ferry told Kompas.com on Monday (30/3/2026).
In addition, he believes that the bustle of economic activity in the market cannot be used as the main indicator to assess the overall economic condition.
“What needs to be looked at is not the crowd, but how much the turnover is and whether the trend is rising or falling,” he said.
Meanwhile, Purbaya refutes predictions from several economists who say Indonesia’s economy will experience a recession in the near future.
He emphasised that he is not anti-criticism, but asks that analyses be presented with a clear data basis.
“I’m not anti-criticism, but don’t say that in two months Indonesia’s economy will collapse or enter a recession,” Purbaya said at the Ministry of Finance office in Jakarta on Wednesday (25/3/2026).
“If oil prices reach 200 US dollars per barrel, not only Indonesia, the whole world could experience a recession,” he said.
According to Purbaya, economic analysis should consider various variables, including historical data and the government’s policy responses in facing global pressures.
“If we can still maintain it here, that means the calculations must be complete. Don’t just talk,” he said.