Indonesia’s Dash for Growth May Prove Costly
The new president wants to ramp up the economy, but too many sudden changes will undermine the country’s standing.
Prabowo Subianto has ambitions for 8% economic growth.
Photographer: Betty Laura Zapata/BloombergFor an economy that’s often depicted as an ascendant power, decision-making in Indonesia has appeared remarkably haphazard lately. In an era when the dollar is very strong and emerging-market assets vulnerable, sudden lurches tend to be punished.
Since a financial collapse in the late 1990s almost dismembered the country, policymaking has been mostly steady and orthodox. Deficits have stayed within sensible legal limits and the currency has been allowed to fluctuate in response to broad developments. Monetary policy has been reasonably transparent and devoted to fighting inflation and keeping the rupiah stable. Consistency has been a hallmark of economics under a succession of Indonesian administrations.