In daily life, every individual, organization, or country experiences ups and downs. Every individual experiences happiness, worry, gloom, and sadness. Even the world's most successful and richest people have experienced setbacks and then risen to the pinnacle of glory. Organizations experience fluctuations. Such is life, like the wheel of life. Being at its lowest point or at its peak is a sign of movement, a dynamic life, and evidence of change.

So, what about the condition of our economy, Indonesia? Recently, it has been predicted to be impacted by the global economic downturn. The effects of the trade war, Brexit in Europe, the Middle East crisis, and Hong Kong have certainly had a direct and indirect impact on our economy. Some also view it from a domestic perspective, arguing that our economic fundamentals are not very resilient to external shocks. However, the government maintains optimism in the face of this situation. Which factors are dominant, and how can we navigate the recession?

Data: Fact or Fallacy

The Central Statistics Agency (BPS) released annual economic growth figures for the third quarter of 2019 at 5.02%. This figure actually slowed compared to the previous quarter's growth of 5.05% and the same period last year's growth of 5.17%. This slowdown is relatively better compared to other countries in the region. From Q1-2018 to Q2-2019, Indonesia, India, Thailand, and Singapore each experienced declines of -0.2%, -3.0%, -2.4%, and -3.1%, respectively. Despite the slowdown, several foreign economists questioned the data released by Statistics Indonesia (BPS). They believe the Indonesian economy should have grown slower than the BPS data.


Gareth Leather (Economist at Capital Economics, London) expressed doubt about the data released by BPS. He stated that monthly indicators show that Indonesia's economic growth has slowed sharply over the past year. "We have no confidence in Indonesia's official GDP figures, which have been stable for the past few years,"


An economist at Natixis Hong Kong expressed a similar sentiment, saying, "I don't know how an economy can grow at the same rate for so long, and this is what Indonesia has. This is despite weak government spending and slowing investment, and the import balance is also under pressure." (Trinh Nguyen, 2019).


The government acknowledges the economic slowdown, but this is helped by still-strong household consumption. Meanwhile, other components, according to a release from the Central Statistics Agency (BPS), actually recorded a significant growth slowdown. For example, Gross Fixed Capital Formation (PMTB), or investment, grew only 4.21% in the third quarter of 2019 compared to the same period last year. This growth slowed compared to 6.96% in the third quarter of 2018. This weakening investment is a clear sign that the economy is indeed sluggish.

Although household consumption contributed 56.52% to the national Gross Domestic Product (GDP) in the same period, this sector is predicted to experience a correction. The decline in consumption of durable goods (goods) Durable goods (durable goods) experienced a decline, although the value remained above 100. The potential decline in consumption is also evident in Value Added Tax (VAT) payments. VAT revenue reflects the magnitude of transactions in the economy. When VAT decreases, it means that buying and selling activity is sluggish. Data shows that from January to August 2019, domestic VAT revenue was recorded at IDR 167.63 trillion, a 6.47% decrease compared to the same period the previous year.

So, what is the condition of consumers who are dominant but lack power in facing future economic turmoil?

Power of the Powerless

Vaclav Havel, a writer and former Czech president, once spoke about the power of the powerless. Havel proposed a society living within the truth, a life of free individuals. A life that rejects lies and pretense, but instead lives a life of freedom with a high level of self-fulfillment. This concept somewhat resembles the principle of self-regulation in capitalism.

A recession or crisis is a dynamic condition where the market seeks a new equilibrium, and we need not panic in the face of it. Keep thinking If we act rationally and restrain ourselves, we can get through this "with ease," as pro-market economists say. However, it's certainly not that simple. An economic crisis accompanied by a political crisis will have a more severe impact, and the poor will suffer even more.

The high consumption contribution could collapse momentarily, and the economy will experience a significant correction. A deeper examination of the structure of this consumption is necessary. If consumption is supported by imported commodities, during a recession, it will be difficult for local people and businesses, who have been enjoying imported goods. During a recession, prices will spike. This is confirmed by the trade deficit, which remains negative, approaching the safe limit of -3%. Unproductive government spending produces competitive products. Declining profits B