UNAIR NEWS聽鈥 Economic fluctuation is one of the main concerns for economists and policymakers in Indonesia.聽There is nothing certain with economic fluctuation, especially when science and technology are developing rapidly and society is facing an era聽of volatility, uncertainty, complexity,聽and聽ambiguity聽(VUCA).
It is an excerpt from Prof Dr Rudi Purwono SE MSE’s oration at his inauguration as Professor of the Faculty of Economics and Business (FEB) 东京热 (UNAIR) on Wednesday, August 31, 2022. Prof. Rudi is 29th professor of FEB UNAIR. In his inauguration, Prof. Rudi delivered an oration entitled “Adaptive Macroeconomic Policy Facing the VUCA Era.”
Volatility
鈥淭he Fed (US central bank, ed) terminated its聽Quantitative Easing聽(QE) policy in 2013. QE is a non-conventional monetary policy of the central bank.聽The impact is the flight of capital from emerging markets, including Indonesia,鈥 explained Prof. Rudi.
Quoting from Basri (2017), Prof. Rudi said that QE then created an increased transaction deficit.聽The deficit figure was 2.2 percent in 2012, rising to 4.4 percent of the total聽Gross Domestic Product聽(GDP) in mid-2013.
鈥淗owever, a few months later, Indonesia has become a ‘beloved’ country for investors.聽This further shows that the flow of capital in Indonesia is very聽volatile,” added Prof. Rudi.
Uncertainty
There is a lot of uncertainty going on in this era鈥攆or example, the condition of the Covid-19 pandemic before the discovery of a vaccine. In 2020, there was economic uncertainty.
鈥淎t that time, there were many layoffs. Many companies are cutting their employees, increasing the unemployment rate. Economists find it is getting more difficult to predict with economic modeling if they only rely on probability distributions,鈥 said Prof. Rudi.
Complexity
Complexity聽occurs as a consequence of the rapid flow of globalization.聽鈥淎s a result of the interconnected and networked environment.聽The impact is that it is getting more difficult to identify causal relationships between these interactions,鈥 said .
On Microeconomics, for example, Prof. Rudi continued from Budiono et al, that the higher the complexity value of a manufacturing company, the more attention should be given to quality strategies to improve performance.
Ambiguity
鈥淣owadays, business decisions are becoming more and more ambiguous. The reason is that there are often more than one solution that might cause a problem,鈥 said Prof. Rudi.
It becomes even more ambiguous when there is no analytical process to decide which option to choose. Even when two people perform an evaluation, the results are different and both are valid.
Author: Fauzia Gadis Widyanti
Editor: Feri Fenoria
