Prepare for a World Economic Storm in the 2023 Recession; What Will Happen to Indonesia?

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A persistent economic downturn or recession is one of the issues that many nations have experienced. The worldwide economic crisis of 2008, which began in the US and expanded to other countries, was one of the worst recessions in modern history. Presently, some analysts are expressing concern that a global recession could occur in 2023.

Effects of the recession on world trade:

A recession in 2023 is anticipated to have a significant impact on the world economy. Among the effects that could manifest are:

1. Declining economic expansion A recession will cause a slowdown in global economic growth. There will be a decline in public spending and investment, and unemployment will rise.

2. Financial markets and stock values are declining. Declines in stock values and financial markets typically accompany recessions. People's wealth and corporate profits may be impacted by this.

3. Decreasing prices for commodities The economies of the major producing nations may be impacted by the drop in commodity prices, particularly for crude oil. Also, this can have an impact on Indonesia and other nations that rely on exporting raw materials.

4. A rise in debt When economies are in recession, they may be forced to borrow more money to make up for lost revenue. The impacted nations may have long-term economic issues as a result of this.

The Recession's Impact on the Indonesian Economy

One of the nations that could experience the effects of the world recession in 2023 in Indonesia. Among the effects that might be felt in Indonesia are:

1. Declining economic expansion Indonesia's economic growth is likely to be impacted by the global recession. There will be a decline in public spending and investment, and unemployment will rise.

2. Decreasing prices for commodities A significant producer of commodities like coal and palm oil in Indonesia. The Indonesian economy could be heavily impacted if commodities prices decline.

3. Depreciation of the rupiah Investors will likely look for safer places to put their money if there is a global slump. The rupiah's value relative to other currencies may decline as a result of this.

4. Decreased investment. The decreased investment could have an impact on Indonesia's long-term economic growth.

The Advantages and Disadvantages of a Recession

1. The consequences of recessions on the economy might be positive or negative. The following are some advantages of a recession:

2. A recession may compel the administration to implement economic changes and deal with the economy's underlying issues.

3. Investors may be able to purchase securities or assets that were previously too pricey thanks to falling stock and financial market prices.

A recession, however, also has detrimental effects on the economy, such as:

1. A recession can result in lower income, a higher unemployment rate, and lower purchasing power for consumers.

2. Since they have trouble acquiring funding, small and medium-sized firms are frequently affected by recessions.

3. Social and economic inequality can worsen during recessions, making the weak and vulnerable even more defenceless.

4. During a recession, many nations are compelled to curtail spending in order to close budget gaps, which may have an impact on public services like education and health.

Investors may be able to purchase securities or assets that were previously too pricey thanks to falling stock and financial market prices.

A recession, however, also has detrimental effects on the economy, such as:

- Recessions can result in lower incomes, higher unemployment rates, and lower purchasing power for consumers.

- Recessions frequently affect small and medium-sized enterprises because they have a hard time getting finance.

- Economic and social inequality may worsen during recessions, making the weak and disadvantaged even more vulnerable.

- Many nations are compelled to curtail expenditure during a recession in order to close budget deficits, which can have an adverse effect on public services like education and health.

Conclusion

It is anticipated that the 2023 recession will have a significant impact on the world economy. Indonesia, a developing nation, could also experience the effects of the recession. Reduced economic growth, declining commodity prices, the depreciation of the rupiah, and a decline in investment are just a few of the adverse effects that could affect Indonesia.

To address the effects of the recession on the economy and society, the Indonesian government must implement the necessary steps. Maintaining economic stability, expanding investment, bolstering the non-commodity sector, and keeping the budget deficit within healthy bounds are a few steps that can be implemented.

References:

IMF World Economic Outlook, April 2021

Bank Indonesia, Economic Outlook, November 2021

BBC News, "What is a recession?" (https://www.bbc.com/news/business-50295402)

CNBC, "The next recession is coming. Here's what to do when it arrives" (https://www.cnbc.com/2019/10/23/the-next-recession-is-coming-heres-what-to-do-when-it-arrives.html)


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