KONTAN.CO.ID – Indonesia is officially a recession because economic growth in the third quarter of 2020 is still experiencing contraction. The Central Statistics Agency (BPS) noted that economic growth for the period July to September 2020 was minus 3.49% yoy.
“So that cumulatively, Indonesia’s economic growth from the first quarter of 2020, the second quarter of 2020, and the third quarter of 2020 contracted by minus 2.03% yoy,” said the head of BPS Suhariyanto, as quoted as saying. Kontan.co.id, Thursday (5/11).
In hindsight, Indonesia’s economy in the second quarter of 2020 was recorded at minus 5.32% yoy. The economy in that quarter was under pressure due to the Covid-19 pandemic.
Thus, referring to the definition of a recession which means a decline in Gross Domestic Product (GDP) for two consecutive quarters, Indonesia is officially a recession. So, what should be done during a recession?
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5 things to do in a recession
Summarized from Bankrate.com, here are 5 things to 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.
In addition, make saving a priority. First of all, focus on filling your emergency fund with one month’s living expenses. After that, pay off your debt, and then focus on building a reserve for three to six months.
2. Reduce and reduce spending
Pressing and reducing spending is one of the things that must be done during a recession. You should check your monthly expenses and identify any needs that are not really needed or urgent.
In other words, prioritize primary needs and put aside secondary, let alone tertiary, needs.
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3. Adjust your lifestyle according to your ability
It’s a good idea to create a monthly budget to ensure that you live within your means and don’t overspend. Experts usually recommend spending no more than 30% of your net income (after-tax income) on selected items.
One of the main necessities that must be paid is for rent or mortgage, food shopping, and other daily necessities. Meanwhile, eat less out and take vacations.
4. Paying debts
The corona virus pandemic has caused an economic downturn that has resulted in layoffs. If you are worried that you might lose your job, then paying off your obligations such as debt might help you relax.
Prioritize paying off credit card debt, then switch to other types of loans, such as KPR or KPM. Even if you’re not worried about losing your job during a crisis, it’s still good financial practice to pay off your debt.
5. Improve skills and build a side business
During a recession, the unemployment rate for those with a bachelor’s degree or higher is much lower than for those with a high school education or less.
Focus that you have skills that job recruiters can use. In addition, try to build a side business to secure income.
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