The recession itself is characterized by a weakening of the global economy and has an impact on every nation's domestic economy as a whole. A nation's likelihood of experiencing a recession increases if its economy is reliant on the world economy.
An economic downturn can concurrently affect all aspects of the economy, including business profits, employment, and investment. Deflation or declining prices are typically indicators of an economic downturn, while stagflation is the fast rise in prices during an economic upturn.
The imbalance between production and consumption, the slow or declining economic growth for two consecutive quarters, the vastly higher value of imports than exports, and the rising unemployment rate are only a few of the indicators that the recession is being caused by these variables.
In 2023, a global recession, according to many economists, will occur. So, as part of preparing for a recession in 2023, it's critical for us to understand financial management advice.
The information below was compiled by merdeka.com on Thursday, October 10, 2022, using data from media.neliti.com and other sources. It includes advice on how to deal with the 2023 recession as well as money management tips.
causes of the recession in 2023
The first thing you need to know is what will create the recession in 2023 before you can deal with it. Many banking, financial, and investment professionals believe that the influence of the Russia-Ukraine conflict on inflation is one reason why there will be a recession in the future.
Following the rise in inflation, central banks in European and American nations tightened monetary policy by raising the benchmark interest rate, which had an effect on decisions made by central banks in other nations.
Whereas if the reference interest rises, the business's cost of capital and credit interest will likewise go up. The local currency typically declines in value in comparison to other currencies as the next impact occurs.
The quantity of local currency that will be released to pay the guarantor in foreign currency will also rise if a country has a lot of foreign currency loans from the government or the business sector.
A worldwide economic crisis or recession will eventually result from the interaction of a number of rapidly growing basic costs, rising inflation, rising credit interest rates, and the depreciation of the local currency if this condition lasts for a long time and does not improve.
How to Survive the 2023 Economic Downturn
1. Start by picking up a new skill.
Learning new skills is the first step towards surviving the 2023 recession. We all need to keep growing as we will inevitably experience a recession.
The more you learn, the more money you make, according to a proverb. Additionally, having new talents can help you get a better job.
2. Get ready in case you are ever laid off.
You only need to get ready in case you get laid off one day if you want to survive the 2023 recession. The Central Bank will increase interest rates, as was already announced, in order to promote monetary stability. One way or another, a company's financial stability is impacted by an increase in interest rates.
So, whether you like it or not, firing people is the last line of defense for businesses against the possibility of a recession. If this occurs, individuals should examine their resumes throughout their careers; even now is a good time to update their LinkedIn profile information.
Reestablish contact with the network next. Increase or restart saving money for an emergency fund, or explore for other employment options.
3. Look for additional sources of income besides your basic salary
The second thing you need do to prepare for the 2023 recession is to start looking for additional sources of income besides your regular salary. One way for people to establish a business and make more money is through their hobbies. Given the growing prominence of e-commerce, individuals can also try selling online. Additionally, investing is a choice that the community has as well.
4. Calm Down About Investments
It is important to prevent this tendency when people liquidate their financial holdings in large quantities due to a need for additional funds. since you already evaluated the company's success when you first invested your money.
5. Cut back on pointless expenses
The pressure of spending money on entertainment demands, such as shopping, paying for streaming services, or attending concerts, is not felt by those in normal or even favorable economic conditions. But given the possibility of a recession in 2023, it would be wise to curtail or at least temporarily delay this practice.