How has the Indonesian economy fared during the recession?
A recession occurs when a country's economic conditions deteriorate. This is reflected in negative gross domestic product (GDP), rising unemployment and two consecutive quarters of negative real economic growth. A recession occurs when economic activity stagnates and experiences a significant contraction over months or years. This situation is affecting people's lives. In general, a recession occurs when a country's economy experiences negative growth for two consecutive quarters. As we all know, 2020 has brought the world into recession due to the Covid-19 pandemic. This has led to staff reductions and many employees have been laid off.
Here are some reasons for the recession reported by various sources
First,In 2020, the world experienced a recession due to Covid-19, but now an economic recession is likely due to high inflation rates due to rising prices of many energy commodities.
Second,Economic shocks, such as when the world was hit by the COVID-19 pandemic, are one of the causes of economic recession. This is shown by people's weak purchasing power due to financial difficulties.
Third, Deflation causes not only inflation but also recession. Deflation is characterized by falling prices of goods and services. Deflation can seemingly increase people's purchasing power, but when it becomes excessive, it hurts providers of services and goods.
Fourth,Import and export conditions affect a country's economic growth. If imports outstrip exports, it could be a sign of a recession. If a country brings in more demand from abroad, it risks running a budget deficit. If that happens, national income will fall and there is a possibility of falling into recession.
Last,The cause of the recession lies not only in the immediate economic sphere, but also in technology. With the existence of the industrial revolution, there are concerns that many human jobs will be replaced by artificial intelligence (AI) and robots. In that case, many workers could lose their jobs and a recession is inevitable.
Recession characteristics
Declining Job Opportunities Declining job opportunities have led to rising unemployment, indicating weak economic growth in the country. When this happens, the crime rate is high. Rising government crime could cause investors to lose confidence in their investments and ultimately plunge the country into recession.
Negative Economic Growth Negative economic growth for up to two consecutive quarters in a country can trigger a recession. This state generally arises because it is subject to volatility from investment, national income, consumption, expenditure to imports and exports. If this continues over the long term, it will be difficult to avoid a recession.
Impact of economic recession on Indonesia and the world