The Effect of Inflation on Economic Growth in Indonesia

Abstract

This study aims to determine the impact of inflation on economic growth in Indonesia over the past six years. Analysis of the object of research using qualitative methods. This is because the research data is presented in descriptive form by examining the phenomenon of inflation that occurs in Indonesia, the factors that influence and the impact of inflation on economic growth in Indonesia. The theory of inflation and economic growth is used to analyze the data collected through library research techniques and then analyze the data using three stages, namely data reduction, data presentation and conclusion drawing. The results and discussion show that inflation in Indonesia is caused by several factors, one of which is the excess money supply compared to public demand. An increase in the money supply indicates a potential decline in the value of money and an increase in inflation. Low and stable inflation can encourage economic growth, reduce debt and encourage investment. A modest and unstable increase in prices will make entrepreneurs less motivated to increase output. This will impact the value of GDP and affect a country's economic growth.