If a recession is inevitable, this is what society can do

KOMPAS.com – The impact of the Covid-19 pandemic on the world economy is evident in sight.

This year, a number of major countries have announced experiencing recession or negative economic growth for two or more consecutive quarters.

Call it the United States, South Korea, France, Germany, Singapore, Spain, Italy, and others.

Indonesia, has not yet declared a recession. However, the potential leading to this condition is considered open.

President Joko Widodo has warned, if growth the economy Indonesia in the third quarter of 2020 is still negative, so Indonesia will enter the brink of recession.

This is because the growth in the previous quarter was recorded at minus 5.32 percent.

“If we are still in a minus position, it means we are entering a recession,” said Jokowi, Tuesday (1/8/2020) as reported. Kompas.com previous.

Also read: Jokowi: If Still Minus, That Means We Enter a Recession

End of September

Economist and researcher from the Institute for Development of Economics and Finance (INDEF), Bhima Yudistira, said a recession could occur in the third quarter of 2020 which ends in September.

Recession “It will certainly happen when the third quarter of negative economic growth,” said Bhima, contacted Wednesday (2/9/2020).

He said a number of indicators had led to a recession, including the growth in bank credit, according to Bank Indonesia money supply data as of July 2020, which was still 1 percent or not experiencing a significant increase from the previous month.

“Even for working capital credit, it was recorded negative 1.7 percent and consumption credit grew 1.5 percent. Sluggish growth in bank credit shows a high level of risk on the debtor’s side so that banks brake on new credit expansion,” he explained.

Also read: Australia Experiencing First Recession in Nearly 30 Years

The second indicator is deflation data for July and August, showing that people’s purchasing power is still depressed.

Bhima explained, if the recession did occur then as a consequence there would be many people who would lose their jobs and income due to the unilateral termination of employment from the company.

“Automatically, the existing funds are not sufficient to support daily needs. People need to be more creative to start a business in the digital economy sector,” said Bhima.

Business that can survive

Business in the digital realm is seen as a promising field in this difficult time, because many people fulfill their needs through digital platforms.

“This is an economic motor that has good prospects when a phenomenon occurs work from home and the pandemic positive rate is still high. So people increasingly depend on the consumption of goods and services online, “he said.

“Hopefully there will be new job creation in the manufacturing, trade, communication and logistics industry sectors, because of the digital economy bonanza,” he added.

Bhima said, starting now, it is necessary to make preparations so that the economic downturn does not continue. According to him, all parties can take a role.

“Our common task is to stop the recession from continuing in the fourth quarter of 2020,” he explained.

Also read: Covid-19, Economic Recession, and Changing Work Culture

What society can do

Quoted from Kompas.com (4/8/2020), financial expert Ahmad Gozali said the impact economic recession, especially in the lower class society is the rising unemployment rate.

“Domestic production is reduced automatically employment is also reduced. This has led to an increase in the poverty rate,” Gozali said when contacted by Kompas.com, Tuesday (4/8/2020).

How to survive a recession

In order to survive a recession, Gozali said there are several things that can be done in general, namely:

  • Protect your source of income

As an employee, according to him, it is better not to aggressively change jobs before there is certainty that the new job is more stable.

“For those who have a business, reconsider the expansion plan,” said Gozali

He presented the proposed fund should be taken care of 3-12 times monthly withdrawals in liquid form.

“This means, if it is less than that now, it can be added by reducing high risk assets and increasing liquidity,” said Gozali.

  • Hold large spending, especially credit

If previously there was a vehicle or home loan plan, it is necessary to study the risks again.

“Is it safe enough to continue with the plan. Don’t be too pushy, for example using the reserve fund to pay down payment,” said Gozali.

“The point is that reserve funds are becoming increasingly important, don’t use them for other things just yet. Even if they can be added,” he added.

  • Keep shopping regularly

“Because household consumptive spending for important things in Indonesia is actually one of the dominant economic drivers,” said Gozali.

Also read: If there is an economic recession, here’s what society can do

.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.