Too mild?

THE currency has fallen by over a tenth against the dollar this year, and Indonesian shares are near bear-market territory. Foreign trade is down by a fifth compared with a year earlier, while bad loans are rising. With growth at a six-year low and foreign money leaving, Indonesia’s economy provides plenty to worry about.

It is perhaps a measure of the change in perceptions over Indonesian prospects that the president, Joko Widodo, feels bound to reassure foreigners that things are nothing like as dire as during the Asian financial crisis of 1997-98, when the rupiah lost four-fifths of its value, or in 2008, when the global financial crisis crashed onto Indonesia’s shores. He is surely right that Indonesia’s challenges are not nearly so acute. But the slowdown nonetheless highlights a chronic problem. With global trade growth slowing and Chinese demand for commodities falling, Indonesia can no longer count on exporting resources, whether coal, oil, palm oil or nickel. A years-long commodity boom let Indonesia delay reforms and investment in such difficult and capital-intensive areas as infrastructure. Too little emphasis was put on better schooling for young Indonesians. Like other exporters of resources, Indonesia could coast along, corrupt and inefficient. Mr Joko knows this must change. Whether he has the right political approach remains unclear.