Indonesia's Economic Challenges Seen as Largely Driven by Global Pressures
The weakening of the rupiah and global economic uncertainty are still considered the main challenges for the Indonesian economy today. These pressures are said to stem more from external factors than domestic policy issues.
Monash University economist Hizkia Yosie Polimpung stated that the various pressures on the rupiah and the national economy are also being experienced by many other developing countries. Therefore, he believes it is inaccurate to place the entire burden of the current economic problems on the government.
“The pressure on the rupiah cannot be entirely blamed on the Indonesian government because the global factors at play are very strong and are affecting almost all currencies in Asia,” said Hizkia during the Constitutional Economics Forum entitled ‘The Future of the Rupiah and a New Paradigm’ in Jakarta on Thursday (11/6/2026).
Hizkia admitted that he initially did not always agree with the government’s policy direction. However, after examining the various steps taken, he assessed that several policies show a progressive direction. “I must admit that after studying the policies being implemented, there are many steps that I consider quite progressive,” he said.
According to Hizkia, the main challenge currently lies not in the government’s policy direction, but in the readiness of the national economic structure to execute these policies optimally. Several programmes have been well designed, but they still require stronger economic foundations.
“The policies are progressive, but the challenge lies in the readiness of the underlying economic structure. Good policies do not necessarily produce maximum impact immediately if the foundations are not ready,” said Hizkia.
He assesses that the government continues to strive to boost economic growth through various fiscal and monetary instruments. Meanwhile, global economic turmoil is triggered by various factors, ranging from geopolitical dynamics and technological competition, to shifts in international capital flows. “This means almost all developing countries face the same pressures on exchange rates and economic growth,” Hizkia stated.
Hizkia also highlighted the important role of households in supporting the national economy. Based on his research, public consumption remains the main engine of economic growth in Indonesia and other Southeast Asian countries. “Households and the middle class are the main buffers of the economy. As long as public consumption is maintained, economic growth will continue to have a strong foundation,” he said.
Nevertheless, he cautioned that the middle class is currently facing pressure due to rising living costs and global economic uncertainty. Therefore, government policy must continue to be directed at maintaining people’s purchasing power, strengthening economic protection, and encouraging the reinforcement of the real sector. “In my view, the policy direction is already on the right track. The challenge now is ensuring that these policies truly reach and are felt by the public,” Hizkia concluded.