Chapter 5: Indonesia*
Indonesia is the largest country in Southeast Asia and has emerged as one of the major global economies. It has come to the forefront of policy discussion and debate since the East-Southeast Asian financial crisis in the late 1990s. In the low inflationary Asia-Pacific region, Indonesia is considered an inflation-prone country. This is largely because of Indonesia’s inflation experiences during the 1950s and early 1960s when ongoing high and volatile inflation took it to the verge of ‘near-hyperinflation’ and economic collapse. Most economists, writing on Indonesia’s economy, have subscribed to the view that this inflationary episode had fiscal-monetary roots. The political change in 1966 and the subsequent stabilization and economic reforms combined to bring inflation to a single-digit level within a remarkably short period of time. In the three decades from the late 1960s to the late 1990s, Indonesia’s inflation remained at a moderately high level, on average within the range of about 10–12 per cent per annum, except during three high inflationary episodes provoked by supply or external shocks (this section uses data based on Table 5.1). The first episode arose from the 1973–74 OPEC oil shock when the inflation rate rose to about 35 per cent per annum. The second OPEC oil shock of 1979–80 pushed Indonesia’s inflation up to about 20 per cent per annum.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.