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KONTAN.CO.ID – Indonesia is officially in recession because economic growth in the third quarter of 2020 is still experiencing a contraction. The Central Statistics Agency (BPS) pointed out that economic growth for the period from July to September 2020 was minus 3.49% year-on-year.
“So cumulatively, Indonesia’s economic growth from the first quarter of 2020, the second quarter of 2020 and the third quarter of 2020 contracted by less than 2.03% year-on-year,” said the director of BPS Suhariyanto, quoted by the medium. Kontan.co.id, Thursday (11/5).
In hindsight, the Indonesian economy in the second quarter of 2020 was down at minus 5.32% yoy. The economy in that quarter was under pressure due to the Covid-19 pandemic.
Therefore, referring to the definition of recession which means a decrease in Gross Domestic Product (GDP) for two consecutive quarters, Indonesia is officially a recession. So what should you do during a recession?
Read also: Indonesia’s economic downturn, here’s the way to save money
5 things to do in a recession
Summarized from Bankrate.com, here are 5 things you can do during a recession:
1. Increase savings and emergency funds
Losing a job during an economic recession can happen and can make it difficult for people to pay for their daily expenses. Preparing an emergency fund also allows you to keep buying what you need when looking for a new position.
Plus, make saving a priority. First, focus on filling your emergency fund with living expenses for a month. After that, pay off your debt and then focus on building a reserve for three to six months.
2. Reduce and reduce spending
Pushing and cutting spending is one of the things to do during a recession. You should check your monthly expenses and identify any needs that are not really necessary or urgent.
In other words, prioritize primary needs and leave out secondary needs, much less tertiary ones.
Read also: The rupee jumped 1.17% to 14,395 rupees per US dollar an hour before the close.
3. Adjust your lifestyle according to your ability.
It is a good idea to create a monthly budget to make sure you live within your means and not overspend. Experts generally recommend spending no more than 30% of your net income (income after taxes) on select items.
One of the main needs that must be paid, among others, the rent or the mortgage, the purchase of food and other daily necessities. In the meantime, eat less and take a vacation.
Also read: Despite being hit by the recession, Singapore’s banking performance is still better than analyst estimates
4. Debt payment
The corona virus pandemic has triggered an economic recession that has led to layoffs If you’re worried about losing your job, paying off your obligations, such as debt, could put you at ease.
Prioritize paying off credit card debt, then switch to other types of loans, like KPR or KPM. Even if you are not worried about losing your job during a crisis, it is good financial practice to pay off your debt.
5. Improve skills and develop a side business
During a recession, the unemployment rate for those with a bachelor’s or higher degree is much lower than for those with a high school education or less.
Focus on who you have skills that job recruiters can use. Also, try to create a side business to ensure income.
