At the end of September, Finance Minister Sri Mulyani projected that the world economy would fall into recession next year. In his speech at the plenary meeting held at the Indonesian Parliament Building, he said that next year a global recession will hit developed countries such as Europe and the United States.
According to some experts, the recession was triggered by central banks around the world jointly raising interest rates in response to inflation. In addition, global economic conditions were also exacerbated by the COVID-19 pandemic and the conflict that occurred between Russia and Ukraine, thus affecting the hampering of commodity supply in several countries.
A recession is a condition in which real economic growth grows negatively or in other words there is a decline in gross domestic product for two consecutive quarters in the current year. The meaning of the word recession can also be interpreted as a major slowdown or contraction in economic activity a significant decrease in spending generally leads to a recession.
In early October 2020, Head of the Fiscal Policy Agency Ministry of Finance (Ministry of Finance), Febrio Nathan Kacaribu confirmed that Indonesia is definitely entering an economic recession. According to him, signs The recession has been seen since the quarter economic slowdown I 2020, namely 2.97 percent (www.liputan6.com, quoted on October 1 2020). Whereas in previous years, Indonesia always experienced economic growth of around 5 percent per year. But after it was The Covid-19 pandemic has made Indonesia’s economy contract deep enough.
In the second quarter of 2020, Indonesia’s economic growth corrected by minus 5.32 percent. While the government is also projecting again economic growth in the third quarter of 2020 remained negative, namely between minus 2.9 percent to minus 1 percent. Even though the country is in a recession economics, but this incident is not a scary thing. Because almost all countries in the world are also experiencing an economic recession due to the impact of outbreak of the Covid-19 virus.
Being aware of this, the Government has taken a number of important steps to strengthen the national economy and anticipate the impact of the crisis which could affect the sustainability of economic recovery.One of the impacts of the recession that was directly felt by the people of Indonesia was the increase in the price of goods, both in the form of products and services. The price increase was triggered by an increase in demand for goods, but the supply was insufficient, causing a disruption in the supply chain.
“Surely Indonesia has positive factors within the scope of ASEAN, where ASEAN’s economic growth is estimated at 4.9%. In the region, we are still experiencing growth, so of course Indonesia will become a source of growth in the future,” said Coordinating Minister for the Economy Airlangga Hartarto in a virtual interview with Metro TV, Monday (17/10).
The Coordinating Minister for Airlangga also said that Indonesia had managed inflation quite well, where inflation is currently at 5.9%. In an effort to control inflation, the Government has carried out a number of steps such as encouraging collaboration between the Central Inflation Control Team (TPIP) and the Regional Inflation Control Team (TPID) through the National Food Inflation Control Movement (GNPIP) and optimizing the Physical Special Allocation Fund (DAK) for the theme of resilience food and utilization of 2% General Transfer Fund (DTU) to assist the transportation sector and additional social protection.
Former Minister of Trade, Enggartiasto Lukita stated that Indonesia is ready to face a global recession in 2023. Enggar, as he is familiarly called, is optimistic that Indonesia has strong fundamentals compared to developed countries. These results can be seen from the infrastructure that is currently being felt.
The Finance Ministry said the signal of a global economic recession next year is approaching. This can be seen from the slowing and even contracting manufacturing performance in many countries. Even so, Indonesia is still considered safe from these threats. (Hidayat 2022)
Associate Expert Policy Analyst, Center for Macroeconomic Policy, Fiscal Policy Agency (BKF) of the Ministry of Finance Rahadian Zulfadin said that Indonesia’s low dependence on exports is an advantage, so that when a global recession occurs, the impact on the country is relatively low compared to other countries. economists are optimistic that Indonesia will not experience a recession. This is supported by data such as the Consumer Confidence Index which is still at an optimistic level. Where it was recorded that in September 2022 Indonesia’s Consumer Confidence Index (CCI) was at 117.2 and on average in 2022 it was 121.7. Then there is Inflation which is starting to weaken. Indonesia’s inflation was recorded at 5.71% in October 2022, down 0.24% from the previous month.
Furthermore, Indonesia’s manufacturing index is at the level of 51.8 or greater than Malaysia, Taiwan, and South Korea where the highest manufacturing index of the three countries is only at the level of 48.7. However, the chances of Indonesia being hit by a recession do not just disappear. With the issue of recession, people don’t have to worry about it. The government has made efforts to minimize the impact of the economic recession, one of which is the establishment of a Regional Inflation Control Team (TPID) this team will work to create and formulate policies to control food inflation and other economic inflation. (Hidayat 2022)
The way to overcome it is first, prepare an emergency fund. Emergency funds are prepared to maintain economic stability when unexpected things happen. Second, it has passive inkam. This is easy to do nowadays, as a lot of work can be done online and can be found everywhere.
Third, spend moderately and reduce debt. During a recession, it will be difficult to get income, so you have to be smart in managing finances. Fourth, start using insurance. Just like an emergency fund, insurance is needed for unexpected events. Fifth, make investments. The last is to make an investment, because investing is one of the best handles for long-term income. (Wisnu 2022)
Indonesia’s external factors are still very strong. So that Indonesia is not included in the country that is vulnerable to financial problems. Even among the G20 countries, Indonesia is the country with the 2nd highest economic growth after Saudi Arabia. So that in terms of external factors Indonesia is safe.
Hidayat, Khomarul. 2022. “Tanda Resesi Global Semakin Nyata, Bagaimana Dampaknya ke Indonesia?” Kontan.co.id. https://nasional.kontan.co.id/news/tanda-resesi-global-semakin-nyata-bagaimana-dampaknya-ke-indonesia.
Kepala Biro Komunikasi, Layanan Informasi, dan Persidangan Kementerian Koordinator Bidang Perekonomian and Haryo Limanseto. 2022. “Tak Hanya Bersiap Hadapi Krisis Global, Indonesia Juga Tengah Menuju Endemi Covid-19.” Kementrian koordinator bidang Perekonomian Republik Indonesia.
Putri, Lisdiana. 2022. “Pengaruh Resesi Global terhadap Perekonomian di Indonesia.” Kompasiana.com. https://www.kompasiana.com/lisdianaputri/63914d6320058214075b2042/pengaruh-resesi-global-terhadap-perekonomian-di-indonesia.
Wisnu, Putu. 2022. “Resesi? Indonesia Terkena Dampak atau Tidak? Ini Upaya Pemerintah!” Kumparan. https://kumparan.com/putu-wisnu-1664976938890413158/resesi-indonesia-terkena-dampak-atau-tidak-ini-upaya-pemerintah-1zQZmdJgua9/full.