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Sunday, May 29, 2011

Beware Cycle Global Economic Crisis

Macroeconomic expert at Harvard University, Jefffrey Frankel, macro economics would predict natural cycles of global economic crisis in 2012. He spoke in the forum "Coping With Asia's in the Multi-speed Global Economy" held the IMF, Bank Indonesia, and
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Nusa Dua, Bali (ANTARA News) - The macro economist from Harvard University, Jeffrey Frankel, reminiscent of the possibility of global economic crisis cycle every 15 years.

"The implications of this crisis mainly hit the markets grow in 2012," he said during a talk on "Coping With Asia` s Large capital inflows In a Multi-speed Global Economy "in Nusa Dua, Bali, on Friday.

Forum of academics and founder of the state and central bank policies in the Asia-Pacific region was initiated by the International Monetary Fund, Bank Indonesia, and BPKM.

Frankel study on the global economic crisis due to international capital flows occur three times, first in 1975-1981 when the "gift" of world oil production led to the worldwide financial crisis. Product finally occurred in 1982 led to the "lost generation" in Latin America in 1982-1989.

The second cycle occurs in the blast growing markets in 1990-1996. Indonesia and Thailand suffered a big shock due to political and economic crisis which is also due to policies of the IMF on how to handle Indonesia's foreign debt burden.

In this second cycle, Latin American countries, namely Brazil and Argentina, together with Turkey and Russia also suffered due to continued monetary crisis in 1998-2002.

The last one in 2003-2008 which to delay the global financial crisis after the period, namely in 2008-2009. This third cycle may be led to the birth of the fourth cycle in 2010-2011.

"But times change. Today many developing countries have surpassed developed economies. In the 2008-2009 recession, China, Indonesia, India still has good economic growth rates, as well as their fiscal positions," he said.

Moreover, the position of private savings fund grow market countries are also growing steadily enhanced with fiscal policy with more mengeyampingkan prosiklik mechanism.

As a result, the credit rating market countries that grow better. Singapore, China, South Korea, Malaysia, and India has ranked in the top Belgium, Japan, Portugal, Ireland, and Greece.

The problem that then arises due to cyclical and capital movements, he said, is how central banks manage it. "Whether through capital controls, central bank intervention, or sterilization. As for the government of each country is through fiscal policy or whether agricultural commodities," he said.

Especially for central banks, capital controls can be applied in case of price penalty policies more moderate than the mere prohibition. "It would be better if it was designed to change the composition of capital inflows in addition to short-term interests, or bank loans," he said.

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