Indonesia was the country hardest hit by the Asian financial crisis of 1997–98.

In the 1960s the economy deteriorated drastically as a result of political instability, a young and inexperienced government, and economic nationalism, which resulted in severe poverty and hunger. By the time of Sukarno's downfall in the mid-1960s, the economy was in chaos with 1,000% annual inflation, shrinking export revenues, crumbling infrastructure, factories operating at minimal capacity, and negligible investment. Following President Sukarno's downfall in the mid-1960s, the New Order administration brought a degree of discipline to economic policy that quickly brought inflation down, stabilized the currency, rescheduled foreign debt, and attracted foreign aid and investment. (See Berkeley Mafia). Indonesia was until recently Southeast Asia's only member of OPEC, and the 1970s oil price raises provided an export revenue windfall that contributed to sustained high economic growth rates, averaging over 7% from 1968 to 1981.[121] Following further reforms in the late 1980s,[122] foreign investment flowed into Indonesia, particularly into the rapidly developing export-oriented manufacturing sector, and from 1989 to 1997, the Indonesian economy grew by an average of over 7%.[123][124]
Indonesia was the country hardest hit by the Asian financial crisis of 1997–98. During the crisis there were sudden and large capital outflows leading the rupiah to go into free fall. Against the US dollar the rupiah dropped from about Rp 2,600 in late 1997 to a low point of around Rp 17,000 some months later and the economy shrank by a remarkable 13.7%. These developments led to widespread economic distress across the economy and contributed to the political crisis of 1998 which saw Suharto resign as president.[125] The rupiah later stabilised in the Rp. 8,000–10,000 range[126] and a slow but steady economic recovery ensued. However political instability, slow economic reform, and corruption slowed the recovery.[7][8] Transparency International, for example, has since ranked Indonesia below 100 in its Corruption Perceptions Index.[127][128] Since 2007, however, with the improvement in banking sector and domestic consumption, national economic growth has accelerated to over 6% annually[129][130][131] and this helped the country weather the 2008–2009 global recession.[132] The Indonesian economy performed strongly during the Global Financial Crisis and in 2012 its GDP grew by over 6%.[133] The country regained its investment grade rating in late 2011 after losing it in the 1997.[134] However, as of 2012, an estimated 11.7% of the population lived below the poverty line and the official open unemployment rate was 6.1%