Hendro Sasongko About Recession: Innovation is an Important Factor

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FEB, UNPAK— Recession has become a topic of discussion in recent weeks. A recession is described as causing a number of problems related to the economy, has the potential to spread to other problems, and can lead to political problems.

But there are also those who say, the recession is just a calculation on paper. Because, on the one hand, it can be predicted that the economy will definitely contract after the third quarter of 2020, in December. But on the other hand, the threat of a recession does not increase the difficulties already being felt due to Covid-19.

Launching Forbes, (15/7/2020), a recession is a significant decline in economic activity that lasts for months or even years. During a recession, the economy struggles, people lose their jobs, companies make fewer sales and the country's overall economic output declines.

What is the picture of the threat of a recession in Indonesia? What is the impact on the economy of the City and Regency of Bogor?

"Of course we don't have to be pessimistic or give up, because there are lessons to be learned from this condition. Innovation and creativity are important factors for survival in the economic field," said the Dean of the Faculty of Economics at Pakuan University (FE Unpak) Bogor, Dr Hendro Sasongko to BOGOR-KITA.com, Saturday (10/10/2020).

Hendro started his explanation by saying that the government has acknowledged that Indonesia has practically entered the group of countries experiencing a recession, because it is strongly predicted that the economic contraction in the third quarter of 2020 will be between minus 1 to 2.9%.

So if someone says that recession is just a number on paper, or it is not felt, yes, because there may still be a phenomenon of business activity that remains busy, many transactions occur, traffic is still heavy and some sectors or types of business are actually growing.

"The easiest thing is the bicycle business, even expensive brands are also flooded with orders," said Hendro, But economic development is a matter of aggregate numbers, which at a certain time will have a massive impact on the joints of the community's economy.

In essence, a prolonged recession and no effective government action will clearly have an impact on almost all levels of society.

The mechanism is clear, declining demand will suppress production, so cash flow will slow down.

For industry, this has the potential to lead to layoffs, which means unemployment will increase. The financial sector will also be affected due to weak credit demand and the potential for bad debts.

"Of course we don't have to be pessimistic or give up, because there are lessons to be learned from this condition. Innovation and creativity are one of the important factors to survive in the economic field," said Hendro, an academic who earned a doctorate from IPB University.

Bogor City and Regency

Then what is the impact of the recession on the City and Regency of Bogor? The impact is the same, even because the economies of these two regions are quite dependent on the tourism and industrial sectors (where these two sectors are among those affected by the deepest recession) it can be estimated that the economic contraction in these two regions is also quite deep.

Let's see how the impact of the recession on the fiscal capacity of the City and Regency of Bogor, which is reflected in their APBD.

The information is that there will be a deficit, so the Regional Government must prepare an action plan to anticipate it, namely the use of SiLPA and Reserves, which is accompanied by efficiency programs and spending savings.

The relocation and refocusing of the spending budget in the context of handling COVID-19 clearly has an impact on several pre-determined programs and activities, and this has the potential to affect regional development achievement targets.

But again, as God's creatures, Allah SWT, we must not continue to complain and do nothing. As people of faith, we believe that there is wisdom behind this disaster.

"I'm sure," said Hendro. He continued, there is an interesting example from the city of Bogor, where the realization of PAD has almost reached 85 percent as of the end of last September, and the local government is optimistic that the annual target can be achieved.

Indeed, in some sectors, such as tourism and entertainment, it is still understandable if the target is not achieved, but interestingly, the PBB and BPHTB targets have been exceeded.

"Hopefully, this achievement will have an impact on the sustainability of the previously established development program," said Hendro.

How should society react?

According to Hendro, the community, in order to remain wise in managing their finances, must prioritize basic needs, be careful to meet secondary needs, and not be easily tempted by tertiary needs.

If you have sufficient financial capacity, please make prospective and protective investments. We hope that the stimulus policies provided by the Government will have a positive effect so that they are able to create momentum for economic growth. Remember, the “gearing machine” of our economic growth is mainly supported by consumption.

“If consumption declines due to limited purchasing power, as unemployment rises, obviously this will continue to contract economic growth. This is why the stimulus program is very important,” he concluded. [] Hari