T

he third round of quantitative easing envisioned by the US Federal Reserve will benefit the US and emerging economies such as Indonesia, Bank Indonesia (BI) says.

In a highly-anticipated speech last week, Fed governor Ben Bernanke said that the US “should not rule out the further use of non-traditional policies”, hinting that the world’s largest economy might unleash its third round of quantitative easing since the 2008 financial crisis as a response to a stalling economic recovery and soaring unemployment rate.

If the central bank carries out quantitative easing — injecting more money supply in the market by purchasing treasury bonds and mortgage-backed securities to spur growth — then it will have “positive spillover” to Indonesia, BI spokesman Dody Budi Waluyo said.

“Quantitative easing will not only put the US economy on the right track, but will also boost the global economy, consequently pushing up our exports,” Dody told reporters on Friday.

Acknowledging that quantitative easing would again prompt hot money inflows to Indonesia, Dody said the policy would have a more positive impact on Indonesia’s macroeconomic fundamentals in the long run, such as a more stable rupiah and a lower cost of imports stemming from the currency’s appreciation.

BI has taken a more pessimistic view on Indonesia’s economic outlook next year, assuming that the nation’s annual economic growth rate will hover between 6.3 and 6.7 percent, lower than the government’s target of 6.8 to 7.2 percent. The central bank’s assessment was based on an expectation that economic uncertainties would continue to prevail at Indonesia’s major export destinations, consequently putting pressure on the nation’s trade balance.

 “Recent developments show that both the US and Europe still have many problems. The most recent case is Spain,” Dody said. The debt-plagued Iberian nation recently implemented austerity measures to trim its debts as its unemployment rate stood at 25.1 percent in July, the highest among European Union (EU) member states.

Rating agency Moody’s this week changed its credit rating outlook for the EU to negative from stable, after issuing negative outlooks for Germany and Netherlands in July.

Despite retaining the EU’s AAA rating, Moody’s warned that it might downgrade its credit rating, which might lead to “deterioration in the creditworthiness of its member states”, Moody’s said in a statement.

“It seems that the crisis in Europe will take a long time to recover,” Bank Central Asia (BCA) economist David Sumual said. “It’s true that Indonesia’s exports to European countries are not that significant, but Indonesia will suffer the impact through China, which is a major trading partner of Europe. Around 20 percent of China’s exports goes to the region.”

“If China feels the impact, then Indonesia will suffer as well, given the fact that we ship around US$21 billion of exported goods to China, mostly commodities,” he added. David said that he doubted that the third round of easing would be effective to spur growth and push down the US’ stubbornly high unemployment rate, which in July hovered at 8.3 percent, according to the US Bureau of Labor Statistics. (sat)