ECONOMIC RECESSION DUE TO PANDEMIC, SHOULD PEOPLE WORRY?

The prolonged corona pandemic has made people around the world increasingly restless.

Not only has the impact on the world of health, the virus has also affected the health sector

economy. An economic recession is a threat in the midst of a pandemic.

Approaching the last quarter of 2020, a number of countries are starting to report problems

economic recession. In fact, developed countries such as Germany, France, Italy, South Korea,

Singapore, to the United States also experienced this. Can Indonesia

endure?

A recession is a very significant and ongoing decline in economic activity

continuously for several months.

According to Forbes, an economic recession can occur when gross domestic product (GDP) shows

negative numbers, rising unemployment, falling retail sales, and falling

income in the long term.

Meanwhile, a healthy economy is an economy that continues to grow from time to time

time. The existence of an economic downturn in the long term indicates

possibility of a recession.

At the beginning of 2020, the world was rocked by the coronavirus pandemic. After struggling for

the past few months to combat the epidemic, the economies of several countries have

eventually fell.

Finally, Australia officially went into an economic recession after their economy experienced a

contraction to 6.3 percent in the 2nd quarter of 2020.

This is the economic recession experienced by Australia over the last 30 years.

Economic growth that has been negative for two consecutive quarters

be a sign of a recession.

Developed countries that are reported to be in recession, of course, make people nervous.

Will Indonesia experience the same thing? Then, what is the impact if a country

experiencing a recession?
Causes of the Economic Recession Recession is one of the unavoidable risks of a business cycle in a
company

country. With conditions like now, Indonesia is very likely to experience a recession. Following

are some of the causes of recession.

First, there is an economic shock. This economic shock has become a serious problem that

If the solution is not immediately found, it will have a negative impact on the country's economy. In

In this case, the corona pandemic has included economic shocks that have hit many countries
around the world

world. Second, excessive debt burden. Under certain conditions, debt can be used as a solution. Will

However, if a person or a country has a lot of debt, there will come a point where it doesn't

can pay debts. It can also lead to a recession.

Third, the asset bubble. Emotion-driven investment will lead to a state of the economy

increasingly needy. Investors are too optimistic that the economy will strengthen. This situation
often

This is called irrational excitement.

Irrational excitement causes the stock or real estate market to bubble. Later,

there will be a point where the bubble bursts and causes a recession.

Fourth, inflation is too high. Inflation is an upward trend in prices over time.

In the economy, inflation is not a bad thing. However, if inflation is too high,

this phenomenon will be very dangerous for the economy.

Fifth, there is uncontrollable deflation. Just like inflation, deflation or falling prices

that occurs continuously can result in a decrease in wages which in turn can suppress

price.

When deflation gets out of control, people and businesses can stop. It is capable

undermining the economy and causing a recession.

Sixth, there is a change in technology. New discoveries lead to productivity

increase. Although it can help the economy in the long run, there is a period

short-term adaptation to the new technology.

If the state policy is not appropriate in dealing with the problem of technological change, it is not

maybe there will be a recession.

Will Indonesia Go into Recession?

Arif Budimanta, Special Staff of the President in the Economic Sector, said that currently
Indonesia has not experienced a recession. In the second quarter (April – June) 2020, the Indonesian
economyindeed experienced a contraction to -5.37% on an annual basis.

Arif also said that the Indonesian state had a chance to escape the threat

recession if in the third quarter GDP moves positively as in the first quarter.

According to Arif, Indonesia has the opportunity to escape the economic recession. Even if the
chance

is still small considering the economic situation is still not stable, people do not need to panic.

Currently, the government is taking steps to continue to encourage growth

economy. There are several sectors that recorded positive growth, namely:

agriculture by 2.19 percent, information and communication by 10.88 percent, and services

finance by 1.03 percent.

The fall of developed countries makes people panic. Unresolved economic situation

The improvement has made people worry that Indonesia too will experience a recession. However,
so far, Indonesia has not experienced a recession. Medium government

make every effort so that Indonesia is free from the threat of an economic recession.

To support the government's efforts to increase GDP, we are advised to keep

carry out economic activities. No need to withdraw cash at the bank. Activity

the economy still has to be done so that GDP increases and we avoid a recession

economy.