Airlangga Asserts That Indonesia's Economic Fundamentals Remain Robust Despite The Depreciation Of The Rupiah

Bisnis/Eusebio Chrysnamurti

Airlangga Asserts That Indonesia's Economic Fundamentals Remain Robust Despite The Depreciation Of The Rupiah

Wednesday, 25 Dec 2024

Coordinating Minister for Economic Affairs Airlangga Hartarto asserts that Indonesia's economic fundamentals remain robust despite the depreciation of the rupiah, which has recently approached Rp16,000 per US dollar. He noted that the rupiah's decline is comparatively less severe than that of other currencies, such as the South Korean won, which has weakened by 11% since the beginning of 2024, and the Japanese yen, which has depreciated by 10.16%. The Brazilian real has experienced a significant drop of 22.82%. "Indonesia's year-to-date decline is only 5.48%, indicating that fundamentally, we are relatively stronger," Airlangga stated during a press conference on Monday, December 23, 2024. Furthermore, the former Chairman of the Golkar Party highlighted several economic fundamentals of Indonesia that outperform those of Brazil.

Airlangga pointed out that Indonesia's budget deficit, which stands at -2.7%, is more favorable than Brazil's deficit of -8.7%. Additionally, Indonesia's current account deficit of 0.7% is also better than Brazil's 2.9%. "Brazil's debt-to-GDP ratio is 78%, while ours is 40%," he added.

He believes that the rupiah's depreciation against the US dollar is primarily influenced by external factors rather than internal ones. One significant factor is Donald Trump's victory in the United States presidential election. Airlangga noted that since Trump's election, the US dollar has strengthened by 6.5% as of November 5, 2024. As of trading on December 23, 2024, the US dollar index was recorded at 108.11. He observed that the rupiah has depreciated by 2.73% since Trump's victory, which is still better than the won's 3.55% decline, the yen's 4.6% drop, and the Brazilian real's 5.11% correction. Airlangga remarked that the rupiah's depreciation has dual implications, as it also presents opportunities. The weaker exchange rate can enhance export competitiveness, particularly for Indonesia's natural resource exports. Additionally, Indonesia benefits from a consistently positive trade balance, which even widened in November.