The Indonesian economy, which is the largest in Southeast Asia, has been reeling under the impact of the COVID-19 pandemic that has caused its first recession in over two decades. Examining its economic turnaround from the Asian financial crisis, the paper studies how strong fiscal support and reforms to improve its healthcare sector along with the launch of its mass COVID-19 vaccination programme would be critical in its recovery.
Indonesia’s Economic Recovery post-Asian Financial Crisis
Indonesia experienced a depression in the post-Asian financial crisis period with its annual growth in 1998 falling to -13 percent. For Indonesia, this was not merely a currency crisis as in other Asian countries, but a more fundamental one, exacerbated by the fall of Suharto and the democratisation of its institutions. Bacharuddin Jusuf Habibie, who replaced Suharto as Indonesia’s next president, turned to the economic technocrats to deal with the ongoing financial crisis. The new government initiated a series of measures to overcome the economic slowdown that included restoring the macroeconomic stability, restructuring the banking system, structural reforms, and stimulating demand and reducing the impact of the crisis on the poor through the social safety net.[i]