Impact on business Businesses may go bankrupt during a recession. In a recession, people have less purchasing power and business profits fall. This condition jeopardizes the smooth flow of money. Price wars then became the company's option to avoid bankruptcy. However, this move wastes profits and should be efficiently patched.
Impact on Workers Closing unprofitable businesses and cutting operating costs means laying off many workers. More layoffs mean more unemployed people. In fact, in the midst of an economic downturn, they must continue to meet their living needs.
Government Impact The recession has reduced government tax and other revenues. This is because a person's income will decrease until house prices fall, ultimately reducing his VAT going into the State Treasury. Declining government revenues increase the number of unemployed, so governments need to open up as many employment opportunities as possible. As a result, lending to foreign banks will also increase.
The impact of the recession on the Indonesian government
Most notable is the increase in unemployment. Governments must quickly find a solution to end the recession in order to create jobs again to absorb workers.
In addition, government lending will also surge as governments need sufficient money to finance the various needs associated with their country's development efforts.
The government's tax and non-tax revenue sources are also very small. During a recession, as workers earn less, the government receives lower income taxes, and property prices fall, resulting in less tax revenue from property sales and less public spending. Low and low. This also has an impact on lower sales tax revenues as they tend to be lower. Moreover, development is still needed in various areas of government, including ensuring the welfare of the people. This results in government spending in the form of payments for the welfare of the people, such as allowances, benefits and subsidies. Declining tax revenues and increasing social security have led to an increase in budget deficits and public debt
How to prevent economic recession in Indonesia and the world
Once we understand the impact, we need to know how to prevent a recession. Because a recession is a scary situation for many sectors. How to avoid a recession:
The way to avoid a recession is to strengthen purchasing power through massive spending. The government is planning massive spending to combat the looming recession to boost domestic demand and spur business investment.
In addition to strengthening purchasing power, the recession can be overcome by implementing measures and strategic projects to create an investment climate so that investors are interested in reinvesting their capital.
