E3 Journal of Business Management and Economics

E3 Journal of Business Management and Economics Vol. 2 (2) pp. 045-058, August 2011; © E3 Journals; ISSN 2141-7482

Indonesia During Two Big Economic Crises 1997/98 and 2008/09: How was the Impact and What was the Main Difference Between the Two Crises?

Abstract

This paper aims to examine the Indonesian experiences with the 1997/98 Asian financial crisis and the 2008/09 global economic crisis. It has three main parts. The first part gives a theoretical explanation of the main transmission channels through which the two crises have affected the Indonesian economy. It also provides a list of key indicators of these types of economic crises. The second part is the empirical part about the impacts of the crises on economic growth, employment, remittances and poverty in Indonesia. One important finding from this study is that the Indonesian economy was much more resilient to the last crisis as compared to the first crisis. During the first crisis, Indonesian economic growth was negative and poverty increased significantly; whereas during the second one, Indonesia managed to keep a positive economic growth rate (though declined), and poverty kept declining. The third part provides a list of main reasons for the difference, and sound banking sector after the first crisis is among the list. JEL Classification: E24, F24, F43, I32

Keywords: 2008/09 crisis, 1997/98 crisis, economic growth, remittance, poverty, unemployment