It cannot be denied that the economy has a significant role in the development and progress of a country. The country is said to be advanced if it has a high level of economic growth, which is indicated by gross domestic product value or national income.
Not surprisingly, every country always tries to boost its economic growth so that it can create the welfare of the people and other sectors in the joint life of the state that can run smoothly and smoothly.
Hope does not always come true. Achieving economic growth is influenced by many external factors that cannot be controlled, such as market mechanisms and others. Therefore, there are times when a country’s economy enters a recession.
What is the economic recession?
In simple terms, an economic recession can be understood as an economic downturn.
As the name implies, which means sluggishness or deterioration, recession results in a simultaneous decline in every activity in the economic sector. Just mention employment, investment, and also company profits.
An economic recession caused a domino effect on each of these economic activities. When investment declines, the level of production of competitive products will also decrease.
The impact will be more due to termination of employment. Further, this requirement increases the people’s purchasing power which decreases which results in a decrease in company profits.
An economic recession is often indicated by a decline in prices called deflation, or in contrast to where product prices or domestic competition are increasing rapidly.
If it is not immediately addressed, the recession will continue for a long time to become an economic recovery, which can result in economic bankruptcy or a collapse of the economy. If the economy of a country has arrived at this crisis, then economic recovery will be more difficult.