In the effort to overcome economic slowdown of a nation,
the thinkable step was to jack up activities of the real sector through a
strategy called quantitative easing [QE]. Essentially quantitative easing was a
stimulus package thrown by the Central Bank to buy state bonds so the
Government could gather some fund to propel the real sector. The recipe was
still strengthened with other efforts such as lowering bank as low as possible.
In the USA quantitative easing had been exercised three
times, the last being on September 2012 last. QE of the thirds phase which was
started by the Fed was worth 40 billion USD for buying bonds of the US
Government each month until unemployment figure in America fell to the level of
7% from the present 8.1%. BN also kept interest rate at low level in the range
of 0 – 0.25% Some other countries were also lowering their interest rate to
propel the real sector such Korea who lowered their interest rate by 3% Australia
3.5%, China 5% and Japan 0.1%.
So over the past week, sentiment of the global money
market Indonesia no exception was showing a new spirit after losing steam on
August last, thanks to release of new stimuli by central banks in leading
countries of the world.
In the first week of September, the European Central
Bank [ECB] announced execution of a policy called Outright Monetary Transaction
[OMT]. Next in the second week the Fed, America’s Central Bank confirmed their
plan to inject liquidity through their policy known as Quantitative Easing [QE]
of the Third Phase Worth USD 40 billion each month till indefinite time limit.
Many circles at home were expecting the stimulus would
bring positive import on Indonesia’s economy. Lesson was learned from the first
stimulus [QE1] and stimulus [QE 3] by the Fed in November 2008 till July 2011
brought positive impact on Indonesia’s economy.
The stimulus had its direct impact on the monetary
sector and indirect impact on the trade sector. Total amount injected by the
Fed came to USD 2.5 trillion, making prices of various assets in the global
money market rise significantly after crashing dramatically when Lehman
Brothers collapsed in September 2008. In the rising trend Indonesia’s money
market was no exception. Through the QF 1 and QF 2 period many assets in Rupiah
posted capital gain significantly.
Beside the money market, the trading sector was also
benefited. Indonesia’s export recorded their best performance, being advantaged
by increasing commodity prices. The increased global liquidity also jacked up
realization of foreign investment (PMA) in Indonesia to increase by up to 85%.
In short, the QE 1 and QE 2 served as driving force
quite significantly in Indonesia. The end result was the fact that Indonesia could
grow by 6.14% in 2010 and 6.5% in 2011. With the coming QF3 the same great
impact was expected to happen. At least the direct impact in the monetary
sector was seen in the latest index of IHSG at 4,257
The same trend seen in the bond market, where return of
SUN State Promissory Notes gradually descended. But this time timing of Q3 injection
was rated by many parties as not as good as QF 1 and QF 2 when the economy of
China as the economic locomotive of Asia and the world was growing as high as
above 9%. Today China’s economy was slowing down, predictably only growing by
7.5%.
The economic slowdown in China kept commodity prices
from increasing the way it happened when QE 1 and QE 2 was launched. As known,
China was the greatest consumer of commodity product in the world together with
the USA. All in all Indonesia’s export which had been on the downturn since
last year, was still not being advantaged by improved commodity prices as long
as China’s economy had not returned to its original fast track.
Now it was time to pin hope on realization of Foreign
Investment (PMA) as well as domestic investment (PMDN) which would serve as
propeller of economy beside people’s consumption. So far direct investment
continued to exceed target and was evidently supportive to sustain national
economic growth. One thing was sure increased investment might compensate the
slow moving export performance in Indonesia.
Although QE 3 and injections by other banks in this near
future was not strong enough to give a big drive as strong as the past
injections, at least it could help Indonesia’s economy to grow above 6% for a
while.
Propeller force of growth be stronger if Government’s
expenditure were spurred on. By percentage, apparently in quarter 2 this year
Government spending was showing increase from 6.1% to 6.9%. if this rhythm
could be maintained Indonesia stands a change to grow at least by 6.3% this
year.
The banking sector had contributed significantly through
notably high credit growth of around 25% of which most of the bigger portion
was in the form of productive credit, i.e. investment credit and working
capital. Contribution of the financial sector could be greater if there were
positive perception and expectation in regard to Quantitative Easing by some
countries especially the USA.
Optimism and positive expectation would motivate the
business world to make expansion by increasing production capacity amidst
liquidity and well maintained Capital adequacy Ratio. Resilience of the
Indonesian Banking Sector was also rated as being in good condition to cope
with the restlessness of global economy.
The money markets of the emerging countries were
predicted to be stormed by foreign capital. Local currencies were appreciated
while the stock markets and sell part of their shares trough Initial Public
Offering. The fund raised would be re-invested for business development.
All in all the economic heartbeat would beat faster and
stronger and economic projections would envisage more growth. With growing
market and rising middle class of high purchasing power, Indonesia appeared to
be attractive to foreign investors. Such was the scenario of impact of the
Qualitative Easing in some countries on Indonesia’s economy
Business News - September 28, 2012
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