Get Ready! Get To Identify The Impact Of Economic Recession For MSMEs In The Country And Tips On Facing It

Illustration of MSMEs (Unsplash)

YOGYAKARTA Indonesia is predicted to experience an economic recession. The trigger is varied, one of which is the war between Russia and Ukraine which triggers economic shocks. The recession that is expected to hit Indonesia has an impact on all levels of society, especially the Micro, Small and Medium Enterprises (MSMEs) sector. Then, what are the impacts of the economic recession on MSMEs?

On the site ashiuangmu.ojk.go.id, the economic recession is a condition where the economy of a country is deteriorating. This was marked by a decline in gross domestic product (GDP), increasing unemployment, resulting in negative real economic growth for two consecutive quarters.

The recession is directly related to buying and selling activities, therefore the impact will be felt by MSMEs. The impact of the recession for MSMEs in general is as follows.

The recession has an impact on the increase in production prices that will be felt in the business sector. The increase in production prices has the potential to shake the resilience of MSMEs with small capital. The increase in production prices can occur for several months or for certain periods.

Another impact of the recession is that sales of MSME products are getting weaker. This was triggered by many things, one of which was the decline in people's purchasing power. The decline occurred because the market preferred to save money and not carry out consumptive activities for the time being.

As production prices rise and products are difficult to sell, one of the strategies that can be done to reduce operating costs is to cut workers. Some MSMEs are forced to take this option to save businesses to keep running.

MSME cash flow becomes unstable. Expenditures can be greater than income so that cash flow becomes unhealthy.

This can be overcome in various ways, starting from reducing product quality, increasing product prices, reducing operating expenses, and much more.

MSMEs have an important role to play in keeping the economy of a country running. Therefore, the government continues to maintain the sustainability of MSMEs by providing various assistance. As for MSME owners, there are several things that can be done, namely as follows.

MSME owners must be able to carry out financial management properly and carefully so that bankruptcy does not occur.

As mentioned earlier, the Government maintains the sustainability of MSMEs by providing access to capital through banks.

This program cannot run without the awareness of its own MSME owners. Businessers are expected to be able to utilize capital from the government well as additional power for their MSME businesses.

Until now, there are still many MSMEs that have not utilized technology properly, especially internet network technology.

MSMEs must be able to market their products through social media so that the range they get can be wider so that the sales balance remains good.

MSME owners are not advised to take unproductive debts. On the other hand, productive debt can be a way out for MSMEs to survive in the midst of a recession.

Productive debt, for example, borrowing capital for the purchase of production machines. It could also be a debt to add to the digital marketing team.

Meanwhile, unproductive debt is like buying a car whose purpose is only for lifestyle, or mobile phones for lifestyle, and much more.

That is information related to the impact of the economic recession for MSMEs. To get other interesting information, visit VOI.ID.