AFTER THE FED AND ECB:
IT’S YOUR TURN, BOJ

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J. Soedradjad Djiwandono
J. Soedradjad Djiwandono, Emeritus Professor of Economics, Faculty of Economics and Business, Universitas Indonesia, and Adjunct Professor of International Economics, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University (NTU), Singapore.

HOW WILL BOJ ANSWER THE CHALLENGE? 

For sure, I would not dare even just to speculate on how BOJ under Governor Kuroda would attempt to answer the challenge of using all available means to provide an answer that would satisfy the market and the economy simultaneously. I only want to mention a possible policy and the implications that may arise in other economies – that of Indonesia to be specific. 

In terms of bilateral trade relations with Japan, there is no problem that I know of. Thus, economic and financial stability in Japan that would lead to better growth will always be welcomed by Indonesia. Even more is their continuing investment in Indonesia, for infrastructure development, among others. All these would more likely be coming if there is a revival of the Japanese economy from the resolution of the challenge that the BOJ is currently facing. 

Read: Still pondering the challenges of developed economies

I hope that with the steady hands of Governor Kuroda, the BOJ could take all necessary steps to deal with the problems related to the current issues. If only the wage level could be maintained at current levels till problems are solved and the economy restart on its road to recovery, then this aspect would come under control. The market is hopefully satisfied with the solution, and the transaction could become normal again. In this kind of resolution, all parties would welcome the condition and resume their normal activities. And major Japanese involvement abroad, including its businesses in Indonesia, would resume, for our economy’s benefit as well. Is this a dream? I bet it is a “realistic dream” that might manifest as reality.