Red Economic Indicators and the Shadow of 1998 Dejavu

The Indonesian economy is under severe pressure. Market confidence continues to decline. In the first trading session after the long Eid al-Fitr holiday, the Jakarta Composite Index (JCI) plunged 7.9 percent to 5,996.14. The rupiah exchange rate continued to plummet, reaching Rp17,000 per US dollar. This was its lowest value since the 1998 monetary crisis. Compared to Rp15,390 per US dollar at the start of 2024, the rupiah exchange rate has fallen 10.46 percent.

Businesses are also suffering, especially the manufacturing sector, which has suffered a double blow. First, rising costs due to imported raw materials. Second, declining sales due to weak market demand. The middle class, which determines market demand, has shrunk by 10 million people over the past five years.

In various informal discussions among intellectuals and the middle class, they are already worried about a repeat of the 1998 monetary crisis. In fact, Prof. Ir. Yazid Bindar, MSc., PhD, a professor at the Bandung Institute of Technology (ITB), stated that a monetary crisis is imminent. He stated that the sharp rise from around Rp16,000 to Rp17,000 per US dollar in a short period of time indicates serious pressure on the economy.

"If this is simply dismissed as a normal fluctuation, Indonesia could be repeating history, a lesson it should be learning from," he said in his column, "Assessing the Monetary Crisis with the Rupiah's Weakening Amidst the Global Trade War Turmoil."

Low public confidence has further increased demand for the US dollar and gold, both of which have soared in price. Meanwhile, the fiscal sector is facing pressure. As of February, the state budget (APBN) had a deficit of IDR 31 trillion, and taxes had plummeted 30 percent.

According to Nailu Huda, an economist at the Center of Economic and Law Studies, the government must be more vigilant in responding to developments in the macroeconomic conditions and the real sector, which continue to be marked by waves of layoffs.

"The government's policies don't reflect efforts to recover the economy. The impacts of the Job Creation Law and the weakening of the Corruption Eradication Commission (KPK) by the Joko Widodo administration are now being felt. President Prabowo's policies, such as budget cuts and 3-kilogram LPG cylinders, demonstrate the leadership's insensitivity to the plight of its people," Nailu Huda, an economist at the Center of Economic and Law Studies, told Infobank, as quoted by Infobank Magazine.

Meanwhile, Poppy Amalia, a psychologist and micro-expression expert, stated that a fractal phenomenon is occurring, with signs similar to those seen before the 1998 monetary crisis. This is evident not only in the plummeting rupiah, but also in the leadership and political development models that resemble those of the New Order era.

"We all pray that the monetary crisis won't happen again. But when measured using the fractal concept, this situation appears to have similarities across scales," he told Infobank on the sidelines of an event before speaking at the Economy Outlook 2025 seminar held by Infobank Media Group in conjunction with the Indonesian General Insurance Association last February.

The tsunami of layoffs is predicted to continue. In the first three months of 2025, 38 factories have already closed. One of them is Sritex, which employs more than 10,000 employees. The Confederation of Indonesian Trade Unions (KSP) stated that 44.07 million workers were laid off in January-February 2025. The Ministry of Manpower also noted that the number of layoffs continues to swell, from 25,114 in 2022, to 64.855 million in 2023, and 77,965 in 2024. Layoffs are further depressing people's purchasing power, which is impacting the performance of the real sector.

Besides creating new chains of poverty, mass layoffs often also make women the first victims. This is because labor-intensive industries generally employ a large number of women. For example, Sritex employs 55 percent of its employees. The decline of the manufacturing industry, accompanied by workforce reductions, has reduced the percentage of women in the workforce from 39.19 percent in 2019 to 36.32 percent in 2024, according to data from the Central Statistics Agency (BPS).

Women, often the first victims of layoffs, are also preparing to increase their role in the informal economy. As in the 1998 and 2008 crises, women were more resilient and could quickly become the driving force of the family economy by engaging in informal work. Consequently, women dominate ultra-micro and micro businesses globally.

Source: Infobank