Indonesia’s financial markets continue to experience turbulence, marked by a weakening rupiah, which has again surpassed Rp18,000 per US dollar. In addition, the Composite Stock Price Index (IHSG) has recorded one of the sharpest declines among global stock markets. On a year-to-date basis, the IHSG has fallen by 36.05 percent.
An economist from the UGM Vocational College (SV UGM), Dr. Yudistira Hendra Permana, stated that Indonesia’s current macroeconomic conditions have reached a serious and concerning stage. The situation is unfavorable for both the government and the public’s economic well-being.
“The government cannot challenge market sentiment by claiming that the economy is generally doing fine,” he said on Thursday (Jun. 25).
Yudhistira cautioned the government against making statements or issuing policies that appear inconsistent, as this could further erode public trust, particularly among investors.
“Investors are becoming increasingly confused about Indonesia’s economic outlook, which continues to be overshadowed by uncertainty,” he said.
According to Yudhistira, one example of policy inconsistency is the revision of the Law on Financial Sector Development and Strengthening (P2SK), which he believes was rushed and seemed forced. The issuance of a new P2SK Law, even though the previous legislation was only enacted in 2023.
“Revising a law within such a short period raises questions about the clarity of the government’s policy direction,” he asserted.
Beyond its impact on investors, current economic conditions are also placing pressure on lower and middle-income communities. Although the effects may not be immediately visible, Yudhistira warned that within the next six months to one year, the weakening rupiah could contribute to higher inflation, reducing people’s purchasing power.
Furthermore, if economic conditions fail to improve, investors may be unable to generate returns in the financial markets. They may be less inclined to channel into businesses in the real sector, limiting growth in productive economic activities.
“The risk is a decline in investor confidence,” he emphasized.
For Yudhistira, the economic challenges currently facing Indonesia, triggered by rupiah depreciation and the sharp decline in the IHSG, can be addressed through consistency in government economic policies. In the short term, he recommended the government remain consistent and avoid rushing to introduce new policies whenever emerging issues arise.
“Policy inconsistency will only discourage businesses from investing. Such conditions are not beneficial for either the government or society,” he explained.
Author: Fatihah Salwa Rasyid
Editor: Gusti Grehenson
Post-editor: Jasmine Ferdian
Photo: Magnific