The 2023 recession has been a hot topic since mid-2022. The President of Indonesia, Joko Widodo, had said that 2023 will be dark, which then became one of the triggers for a lot of discussion about the issue of the 2023 recession. Citing from the report “Recession Issues 2023: Analysis of Public Confidence in Facing a Year Full of Uncertainty” which is the result of collaboration between JAKPAT and Continuum Data Indonesia, this recession issue arises because in the global scope, there are already countries that are experiencing recession or that will be threatened by recession. World Bank President David Malpass also said there was a risk of recession and stagflation after the pandemic. According to Muhammad Syamil Iklil, researcherfrom Continuum Data Indonesia, several things that can cause the risk of a global recession in 2023 include tightening monetary policy (raising interest rates), geopolitical crises such as the war between Russia and Ukraine, oil supply restrictions by OPEC+, and inflation due to supply-demand imbalances. Especially in Indonesia itself, from macroeconomic data on Gross Domestic Product (GDP) growth in developing Asia, Indonesia’s economic growth is predicted to remain positive at 5.3%. But how does society respond to this issue?
Referring to the results of Jakpat’s survey on 1434 respondents, around 84% of respondents claimed they knew about the issue of recession in 2023 although about half claimed not quite understand what a recession is. Head of Research Jakpat, Aska Primardi added that when broken down by age group, Gen Z is the age group that has the largest proportion (22.1%) for those who claim to have never heard about recession issues at all.Moreover 1 in 4 adolescents aged 15-19 years claim to have never heard of recession issues in 2023. Knowing about the issue of recession does not necessarily make people believe in a recession, especially in Indonesia. On a scale of 1-5 for variables of how convinced respondents are that there will be a recession in Indonesia, the average obtained in this survey is 3.06. However, even though they feel unsure, the majority of people are still worried if the 2023 recession really occurs in Indonesia. Among those who claim to know about this recession issue, Gen Z is also the one who feels convinced and worried about a recession in Indonesia.
The thing that people are most worried about related to recession is rising prices, followed by reduced salaries or incomes. The segments most worried about price increases are Gen X (88.9%), while the segments most worried about reduced salaries/incomes are Gen Z (70.9%) and Millennials (71.5%). Gen Z is also the segment most worried about finding a job (64.2%) because as explained by Aska, Gen Z is currently starting their career as a worker.
In responding to the issue of the 2023 recession, in general, people will continue to maintain spending patterns for purchasing basic necessities, and will also try to reduce purchases of non-basic needs. Then, according to respondents’ perceptions, to minimize financial risk, more than half of respondents will still allocate expenses for insurance as usual, and most respondents will try to reduce debt/credit.
When viewed from the age group, this trend tends to be similar, in which each age segment tries to maintain the pattern of purchasing basic necessities and reduce purchases of non-basic needs. However, when viewed in more detail, a slightly different pattern is the allocation of Gen Z which tends to be larger for investment, savings, and emergency fund needs, when compared to the older age segment, Gen X and Millennials. As Aska said, Gen Z of their behavior is a financially literate generation and they claim that their vision is financial freedom.
The data is the result of a survey to the public based on claims of what they will do in response to the 2023 recession. But is this response the right thing to do? In a discussion titled “Should You Be Worried in the Midst of 2023 Uncertainty?” held by Continuum Data Indonesia and Jakpat, Maychelie Vincent Liyanto, a Certified Financial Planner, stated that if a recession occurs, everything must be affected. Vincent added that GDP growth tends to be stable, which indicates that the Indonesian economy continues to run well amid the issue of world recession. However, we still need to be vigilant by securing ourselves first in terms ofpersonal finance, so that if a recession occurs, there will not be a recession also in our personal finance, and also so that we do not become additional factors that cause Indonesia to experience a recession. How can we secure personal finance? That is by making the right financial planning so that we can feel safe and secure. According to Vincent,there is actually no significant differencein financial planning when there is no recession or threatened by recession. Such as the phrase”ready for everything, prepare for nothing” which is the essence of personal finance, in the sense that when all risks occur one by one or occur all at once, good personal finance will always be ready to face everything.
Get the details in our report here.