We must also be alert to the constellation of global monetary policies, where divergence occurs in monetary policies of the Fed and other developed countries, which results in stronger US dollar. It will bring different challenges for us because Indonesia is at the same time facing current transaction balance deficit that still needs to be controlled.
While, on the other, the newly emerging economies, benefiting from globalisation and the low cost production of manufactures, had recycled their earnings as savings to the western economies. For most of the 2000s this apparently mutual beneficial relationship persisted, but eventually it unravelled as a substantial part of the debt accumulated in the developed countries turned out to be unserviceable.