2012, Next Economic Crisis:Harvard Professor

VIVAnews - Harvard professor Jeffrey Frankel figured that developing countries may again be subjects to economic crisis by 2012 if the 15-year economic cycles apply. 

Frankel's prediction is based on the statistics on initial downturns occurred in 1982 and 1997, which allowed him to divide the cycles into three. First off, the 1975-1981 period led to the international debt crisis in 1982. Second phase was during the economic boom of developing countries between 1990 and 1996. Asia suffered another crisis in around 1997-1998, followed by Russia, Brazil, Argentina, and Turkey in 1998-2000.

The global economic crisis recently, between 2008 and 2009, had been a result of a rise in stock markets in 2003-2008. "I can say the the crisis cycles occur in every 15 years. Developing countries will experience the problem in 2012," Frankel addressed the participants of "Coping with Asia's Large Capital Inflows in A Multi Speed Global Economy" forum in Bali today, March 11.

During the seminar, Frankel discussed about two ways in organizing capital inflow: stacking up foreign exchange reserves and appreciating rupiah exchange rate. 

Governor Bank Indonesia Darmin Nasution said Indonesia issues various policies in an effort to block foreign funds from marring the domestic economy. Bank Indonesia anticipates the future difficulties by delivering five key policies including setup of benchmark interest rate, flexibility of exchange rate, accumulation of foreign exchange reserves.