What are the consequences of the world

recession for asian economic and

business?
International Business

Created by Intan Permata Sari

014201500121
Management 4

PRESIDENT UNIVERSITY
2016

Abstract
All Countries practically never have the name in the country's economic
crisis. Because of the crisis is an event simultaneously and have effects that will
spread control every aspect of the State. Many have said that the financial crisis is the
result of a capitalist economy that is totally dependent on the existing market system.
As a result of uncontrolled markets and led to the crisis. The economic crisis
experienced by Indonesia since 1997 was the most severe along the new order.
Characterized by the decline of the rupiah against the dollar outstanding, and
decrease our nation's per capita income is very drastic. Furthermore, a number of
factories and industries that will collapse or seized by creditors following some
businessmen debt maturing in 1998 will soon be generating thousands of new
unemployment with a series of social problems.

Introduction
Indonesia is actually just a victim of the recession that rocked the United
States as a world giant. The influence of the US recession into Indonesia through the
stock exchange and the real sector. Through the real sector, America is a country that
absorbs almost 10 percent of Indonesian exports or second largest after Japan, this
will certainly disrupt the volume of Indonesian exports and undermine companies in
Indonesia that rely on exports to the United States. Weak exports will depress
production in the real sector, which in turn can reduce the financial sector.
The impact of the global financial crisis on Indonesia in general, there is three
things: First, the complexity of the dollar exchange rate will be directly on the dollar
exchange rate will result in the rupiah weakened and will be affected by the impact of
our exports and imports. Secondly, in terms of interest rates. With the dollar, interest
rates will also rise because Bank Indonesia will attract rupiah from circulation. The
result is that inflation will rise. The impact on Islamic banks is becoming less
competitive. Third, the combination of the high dollar exchange rate and interest rates
both have an impact two things. Investment in the real sector will be the void. Other
impacts, investing in stocks. Many people who go out of business capital market
shares.

ECONOMIC CRISIS IN INDONESIA in 1997-1998

The economic crisis certainly has occurred in several major countries in the
world including the US, which indirectly affects the economy of Asian countries for
example, as happened in Indonesia. Therefore the government needs to be vigilant
and anticipatory as the US economic recession is getting worse possibility that a
severe impact on the economic life in the country.
Indonesia can not escape the influence of global economic activity. In
Indonesia, the impact of the crisis began to be felt since the final quarter of 1997 due
to the Asian crisis and the position of Indonesia back depressed when Suprime
Mortgage crisis emanating from the United States began to feel the impact since the
third quarter of 2008 and began to show a weaker pace of economic growth in early
2009. In that regard , the impact of each crisis had a different effect on the Indonesian
economy. In an effort to reduce the impact of each of these crises, government and
Bank Indonesia seeks to oversee the growth and conduct policies that are scalable,
integrated and coordinated with each other to get through the impact of the crisis.
The Asian crisis of 1997 and 1998 attacking the Thai state which then spread
to Malaysia, Korea, and Indonesia began when Thailand crisis with the currency
weakening Bath. Indonesia among the countries affected by the Asian crisis is among
the most severely affected. Broadly speaking there are four fundamental issues that
make the Indonesian economy would worsen. The impact of the crisis is the rupiah
plummeted, businesses and banks are experiencing a surge in short-term debt
payments and at that time the debtor in the country does not have much time to do as
a result of restructuring the business world and the amount of bankruptcy most severe
decline. The global economic crisis that originated from the United States in 2007
began to be felt its impact across the world, including developing countries except
Indonesia in 2008. The impact of the crisis started to affect Indonesia in the third
quarter of 2008. The Indonesian economy begins to compress and it is characterized
by slowing economic growth in Indonesia , fell at 6 percent.

This crisis occurred because of their greedy in capital markets which led
Economic Bubble-price rise is not comparable with euphoria. Price increases that
followed the high inflation that affects mortgage interest rates rise. At that time, the
United States experienced an increase in credit will be items of property, particularly
housing loans. High lending rates led to a default so that the resulting nonperforming
loans are so bad that led to the credit of the Mortgage Suprime down. Therefore,
investors are encouraged to draw assets from emerging markets, including Indonesia.
Indonesia Financial Engineering most feel the impact of the 2008 crisis.
The crisis that hit Indonesia in 1997 is not only the Asian financial crisis but
Indonesia was hit by a currency crisis and a banking crisis. The impact of a currency
crisis that is weakening the Indonesian currency against other currencies. The decline
in the exchange rate increasingly sharp is also accompanied by the termination of
access to capital borrowing from abroad led to commodity production and the less
chance of employment due to the increasing amount depreciate the domestic goods
more expensive than foreign goods, as a result people tend to rely on imported goods.
The impact of the banking crisis that hit Indonesia is the crisis affecting banks'
performance as a result of banks experiencing an imbalance in the intermediation
function. This has an impact on the continuity of banking capital. Losses suffered by
banks is increasingly felt lead to bankruptcy.

Conclusion
The impact of the Asian crisis in 1997 and 2008 against Indonesia Global
crisis has a different impact for Indonesia and the macroeconomic fundamentals of the
crisis differ between the two periods. The government's role in overcoming the crisis
more focused on tightening monetary policy and fiscal measures to support fiscal
stimulus. Recovery after the 1997 crisis relatively slower and bigger panic crisis.
Differences crisis, in 1997 Indonesia was the worst affected, while in 2008 Indonesia
is still quite a stable rate of the economy compared to other countries affected by the
crisis. Challenges of the 1997 crisis and the 2008 crisis are slowing Indonesia's
economy will still pose a threat of high inflation rate which will lower domestic
commodity prices.

Bibliography
Goldstein, M. (1998). The Asian Financial Crisis: Causes, Cures, and
Systemic Implications.
Montes, M. (1998). The Currency Crisis in Southeast Asia (3rd
Edition ed.).