Indonesia's Current Economic Condition Still Far from 1998 Crisis, Analysts Say

Narratives linking the weakening of the rupiah to the possibility of a ‘Reformasi Jilid II’ are considered to lack a strong basis. Indonesia’s current economic condition is said to be vastly different from the multidimensional crisis that hit the country in 1998. Political analyst from Parahyangan University (Unpar) Bandung, Kristian Widya Wicaksono, stated that comparing the current situation with the 1998 crisis is inaccurate when viewed from 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 (12/6/2026). According to Kristian, Indonesia is indeed facing economic pressures due to global uncertainty. However, these pressures have not reached a level that can be categorised as a systemic crisis like the one that occurred at the end of the New Order era. “Indonesia is currently in a phase of severe economic stress, but has not yet entered a phase of macroeconomic collapse like 1998,” he explained. Kristian detailed that the 1998 crisis was triggered by a combination of various problems occurring simultaneously, ranging from the collapse of the financial system, soaring inflation, a wave of layoffs, to the decline in public trust in state institutions. Current data shows that the national economy is still growing positively. Statistics Indonesia (BPS) recorded that Indonesia’s economy in the first quarter of 2026 grew by 5.61 percent year-on-year (yoy), the highest first-quarter growth in more than three years. In terms of price stability, inflation remains at a relatively controlled level. BPS reported annual inflation in May 2026 at 3.08 percent, far below the inflation rate during the 1998 crisis, which exceeded 80 percent. “In 1998, Indonesia experienced a systemic crisis with an economic contraction reaching 10-15 percent and inflation exceeding 80 percent,” Kristian noted. He assessed that the current conditions are different because the government and economic authorities have stronger instruments to maintain national stability. “Current macroeconomic conditions show better resilience. Bank Indonesia is still reporting a sustained trade surplus and inflation that remains relatively controlled within the target range, despite mounting pressures,” he said. Therefore, Kristian reminded the public not to be easily influenced by narratives that equate the current rupiah depreciation with the situation leading up to the 1998 Reformasi. He stated that every economic development must be viewed comprehensively based on available data and indicators. He added that spreading narratives unsupported by data risks creating excessive worry among the public and could affect perceptions of the national economic condition. According to Kristian, Indonesia currently still possesses a stronger economic foundation compared to the period preceding the 1998 crisis. Consequently, narratives linking the rupiah’s depreciation to the possibility of a ‘Reformasi Jilid II’ are deemed to lack an adequate basis.