The downturn in the economy is due to a variety of factors, first of all the drop in exports, down by 30 per cent between January and April, mostly in commodities and manufacturing items.
According to Toto Dirgantoro, the secretary general of the Association of Indonesian Exporters, orders from importing countries has sharply decreased for a wide range of Indonesian products including crude palm oil, rubber, textiles, garment, footwear, fishery product and furniture.
Unemployment has mirrored declining exports, rising to 9.39 million people in August 2008. and due to ailing economic growth, the figure is feared to be rising again.
Falling prices have led China and Pakistan to cancel contracts signed last year.
The Indonesian Textile Association reported slower exports, consequence of a sharp drop of 20 per cent this year from US$ 10.48 billion.
The textile industry is the country’s largest employer with an estimated 3.5 millions workers in more than 4,500 factories.
The Indonesian Statistics Bureau (BPS) recorded fewer foreign orders in January with a drop in 17.7 per cent. It was the biggest month-to-month decline in more than 22 years.
The most significant component to suffer from decreasing export volume was oil and gas exports, which fell by 23.85 per cent, whilst non oil-gas exports decreased by 16.67 per cent.
Indonesian Finance Minister Sri Mulyani expressed concern about the impact on the value of Indonesian rupiah, down 12.033 against the US dollar.
He urged the Bank of Indonesia governor to intervene to protect the national currency and avoid further depreciation.
Meanwhile Indonesia was able to secure US$ 5.5 billion in loans from Australia (US$ 1 billion), Japan (US$ 1.5 billion), the World Bank (US$ 2 billion) and the Asian Development Bank (US$ 1 billion).