The influence of quantitative easing (QE)…

The influence of quantitative easing (QE) from the US and Europe on developing countries such as Indonesia can be both positive and negative. On the positive side, QE can lower global interest rates, which can reduce borrowing costs for companies and households in Indonesia, stimulate investment and economic growth. Moreover, QE can trigger capital inflows to developing countries such as Indonesia, which can increase liquidity in their financial systems and stimulate economic activity.

However, QE can also have negative effects. First, it can lead to an appreciation of the currency of the developing country against the currencies of the US and Europe, making the exports of the developing country more expensive and less competitive. Second, QE can create inflationary pressures in developing countries, as investors may seek higher returns in these countries due to the low yields offered in developed countries. This can cause prices to rise and reduce the purchasing power of consumers.

Furthermore, QE can increase the risk of financial instability in developing countries, as capital inflows can be volatile and may create bubbles in asset prices or create imbalances in the balance of payments. Additionally, the unwinding of QE can cause sudden capital outflows from developing countries, leading to currency depreciations, higher borrowing costs, and economic slowdowns.

In summary, the influence of QE from the US and Europe on developing countries such as Indonesia can be complex and depends on many factors, including the economic conditions of the countries, the monetary policy responses of their central banks, and the degree of capital mobility in the global financial system.

Source : chatGPT