Recession Preppers: Strategies to Thrive

When America sneezes, the world catches a cold.

That saying is more accurate now than ever since the Fed hiked its rates, and the global economy has been slowing down.

The IMF projected that the global economy would only grow by 2.9% due to the economic downturn in 2023.?But Asia’s economy remains resilient, mainly compared to the United States and Europe.

Based on a survey from Bloomberg, Indonesia is ranked 14th out of 15 countries in Asia that are likely to face a recession. The Indonesian economy is recovering and growing at 5,44% in the second quarter of this year, showing signs of recovery and healthy growth.?

But we still need to remain vigilant as we are experiencing a fundamental shift in the global economy, as volatility, uncertainty, and climate crisis continue to worsen. Even though the crisis is abroad and won't directly impact the Indonesian Economy, Indonesian industries will eventually receive the spillover effect, especially those export-oriented sectors like textile and footwear manufacturing.?

The economic downturn in the global north will decrease their demand for our products. A drop in order means less revenue, which often forces companies to cut operational costs. This is the time for industries to get creative and rise to the occasion, and companies need to think of other ways to fend off expenses, and laying off employees should be the last thing on that list.?

Businesses must ride the wave of digitization to make their production process more efficient, access the broader market for their product, and even opt in for domestic substitutes to keep prices of production low. These strategies and innovations are ways to tighten its belt without resorting to job cuts.?

To relieve the burden on companies, KADIN recommends the government to grant tax incentives to sectors that rely on imported resources for production, for example, giving PPH 22 or tax incentives on imported goods for the manufacturing industry. This incentive will significantly help businesses as the rupiah depreciates against the dollar due to global recession.?

KADIN also recommends the government continue to roll out aid to those impacted and low-income families to maintain the affordability of staple goods to support Indonesia’s level of private consumption at 50% of GDP.

The role of civil society and key opinion leaders are also crucial here. The main thing is not to panic and give in to pessimistic sentiment; a sense of nationwide optimism needs to be fostered here to give the market the strength and hope it needs to go through global economic turmoil.?