As if yesterday’s coordinated central bank intervention didn’t make it clear enough, the world is in easing mode. And that’s probably going to continue, with “Operation Twist” from the Fed, and the (seeming) inevitability of the ECB’s two rate hikes.The world is also leaning more heavily on fiscal stimulus. The Obama jobs bill raises at least the possibility that the US will get more tax cuts next year (probably not the spending parts though).
And even in emerging Asia — which is arguably the most robust part of the global economy — governments are ready to spend more.
Today it’s reported that the Indonesia government plans more spending.
To mitigate the impact of the world’s economic slowdown, President Susilo Bambang Yudhoyono’s administration launched a Rp 73 trillion (US$8.322 billion) stimulus package and added government spending as well as fiscal incentives in the form of government-borne import duties and value added and income taxes, to help revive business activities and to avoid employment cuts.
Recent mounting worries over debt troubles in European countries and stalling economic recovery in the United States have prompted policy makers across the world to guard against a potential economic slowdown worldwide.
Bank Indonesia (BI) has predicted a slowdown in the country’s economic growth to 6.5 per cent from the 6.6 per cent projected this year, due to slowing global demand, which could hurt the country’s exports.
Agus declined to give details of the planned stimulus package, which is scheduled to be launched in the first half of next year, but acting chief of the finance ministry’s fiscal policy office Bambang Brodjonegoro said it would combine “fresh money and policies”.
And in Thailand, the government is ready to spend as well.
The Puea Thai-led government has aimed to start several of its stimulus programmes in the next fiscal year from Oct. 1, including tax incentives for first-time homebuyers, according to Deputy Finance Minister Boonsong Teriyaphirom.
Probably the only area you can’t expect any fiscal stimulus is Europe — not because they don’t need it, but because their economic structure currently prevents governments from spending.
More confirmation: Fiscal stimulus back form the dead >
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