JAKARTA: Indonesia’s financial and economic regulators say the country’s economic fundamentals remain strong after widespread political protests sparked selling of stocks and the currency.
The main stock index fell more than 3% in opening trades before regaining some of the losses. The rupiah, which fell 0.9% against the US dollar last Friday as the protests escalated, firmed slightly yesterday morning after the central bank vowed to defend the currency.
Chief economic minister Airlangga Hartarto said the economy was fundamentally solid and would get a boost from a planned incentive package, promising to “minimise the impact” on the economy of the protests, in which at least eight people have died.
“We hope for a peaceful and respectful situation that will support economic recovery,” Airlangga said at a joint press conference with the Indonesia Stock Exchange and financial services regulator yesterday.
Students and civil society groups called off planned protests yesterday, citing heightened security measures.
The demonstrations spread across Indonesia last week, initially over lawmakers’ benefits before they intensified after a police vehicle hit and killed a motorcycle taxi driver last Thursday night.
President Prabowo Subianto has ordered the military and police to take stern action against rioters and looters, after homes of political party members and Finance Minister Sri Mulyani Indrawati were ransacked.
Some state buildings and public facilities such as toll booths in several cities were set ablaze.
“We see that recovery and market confidence in the coming days will be strongly determined by how quickly social, political, and security issues are addressed,” Rully Arya Wisnubroto, an analyst with brokerage Mirae Asset Sekuritas Indonesia, said in a note to clients.
“Indonesia’s economic conditions are relatively stable, though not outstanding. If investor confidence is not restored, short-term economic instability may occur,” he added.
The economy grew by an annual 5.12% in the second quarter, the fastest pace in two years, according to official data. — Reuters
