(Image via: Detik Finance)

Economic recession: What should we do?

It is without doubt that Indonesia will be experiencing the hurdle of economic recession in its third economic quartal this year (quartal III-2020). The Ministry of Finance has released their projection of Indonesia’s economy which ranges from -1% to -2.9%.

Having learned this distressing news, the country should be better prepared and brace itself for ‘impact’ (of the recession). There are several natural steps that are normally taken by a society in such a time like this. The Executive Director for Development of Economics and Finance Tauhid Ahmad said that people’s natural move would be toward saving their money. Saving is thought to be the right thing to do to sustain their lives during recession, making sure they have enough to support their lives.

However, according to Tauhid, this is not the right thing to do. He said that refraining from consumptive activities would even hamper economic recovery. This is because Indonesia’s GDP relies heavily on domestic consumption. He clarified that cutdowns of expenditure are necessary, but transactions over necessities must not decrease. The lower consumption rate is, the slower economic recovery will be. The government should stimulate buying power by providing economic stimulus like cash handouts.

Similar opinion came from Mohammad Faisal, the Executive Director of Center of Reform on Economics Indonesia. He said that depression would lead people to economize, but do not make major cutdowns that would cripple the national economy.

Faisal warned that we must not be panicked. Being panicked will only make things worse and bring us into a bigger crisis.

Source: https://bit.ly/2RTa6UI