7 Countries Trapped in Recession: The recession storm began to hit one country after another in the world, due to the Russia-Ukraine war which caused energy and food scarcity. As a result of the war between the two countries, the supply chain was disrupt resulting in scarcity and rising commodity prices, both food and energy, which began to occur.
In the end, these conditions had an impact on inflation spikes in various countries, including Indonesia. Central banks have also begun to raise their benchmark interest rate to contain the surge in inflation. Although, the increase in the benchmark interest rate also slowed down economic growth in several countries. In economics, a country can said to in a recession if its economy contracts or goes minus for two consecutive quarters. So which countries stuck in a recession?
Russia has officially fallen into economic recession after nine months of pounding Ukraine. Russia’s gross domestic product (GDP) fell 4 percent in the third quarter of 2022. The GDP data is taken from preliminary estimates by the National Statistics Agency Rosstat. The same thing happened in the second quarter, in other words Russia technically met the definition of a recession.
According to the office of Boris Titov, presidential commissioner for entrepreneurs, about a third of the 5,800 Russian companies surveyed had recently seen a decline in sales in recent months. The Russian Central Bank expects gross domestic product to contract by 3.5 percent this year. The IMF and World Bank predict a decline in Russia’s GDP of 3.4 percent and 4.5 percent, respectively.
2. Hong Kong
Hong Kong is also still stuck in a recession. The country’s Gross Domestic Product (GDP) has contracted for three consecutive quarters due to weakening external trade. Hong Kong’s GDP contracted minus 4.5 percent. Much deeper than the contraction in the previous quarter, namely minus 1.3 percent.
Some analysts see Hong Kong’s economic recovery target as hampered by rising inflation, sluggish global demand and weak consumer sentiment in the trade-reliant city. Moreover, the covid-19 restrictions weighed heavily on Hong Kong’s economy since early 2020. It halted tourism and business travel and pounded bars, restaurants and shops repeatedly for a long time.
3. Sri Lanka
Sri Lanka’s GDP has contracted for the second straight quarter. It was noted that GDP in the second quarter of 2022 contracted by minus 8.4 percent, deeper than the previous quarter, which was minus 1.6 percent. Sri Lanka’s economy is not doing well. In recent times, the country has been hit by an energy crisis that has sent prices soaring.
In fact, the country was bankrupt. To improve the economy, the International Monetary Fund (IMF) also gave temporary approval for a loan of US$2.9 billion or the equivalent of Rp.42.63 trillion (assuming an exchange rate of Rp.14,700 per US dollar) to Sri Lanka. In granting this loan, the IMF provided conditions for Sri Lanka, namely that they must obtain financing guarantees from creditor countries for their previous debts. Loans or bailouts provided by the IMF are valid for 48 months or 4 years. Thus, in this period it is hoped that Sri Lanka can increase revenue by expanding the tax base to support fiscal consolidation.
Afghanistan has yet to release its latest economic growth data. However, in the fourth quarter of 2021, their GDP contracted minus 20.7 percent, deeper than the contraction in the previous quarter, which was minus 2.4 percent. Afghanistan has been reeling from a dire economic crisis since the Taliban took over from the US and its allies last year. The mainstay of foreign aid practically stopped overnight and Afghanistan was hit by sanctions, such as a halted bank transfer service that paralyzed the trade sector. Half of the country’s 39 million people face life-threatening food insecurity. Meanwhile, civil servants, doctors, nurses, teachers have not received a salary for months.
Macau’s GDP contracted by minus 39.3 percent in the second quarter of 2022. This contraction was deeper than the previous quarter, which was minus 8.9 percent. Macau’s economic condition is not good. it was recorded, the central bank of Macau also raised interest rates by 75 bps to 4.25 percent in November 2022. This policy made Macau’s interest rates the highest since February 2008. The move follows a similar one by the Hong Kong Monetary Authority as the territory falls under an exchange rate system linked to the Asian financial centre.
Brunei also seems to be still stuck in the abyss of recession. How could it not be, this country’s GDP growth contracted for two consecutive quarters. Brunei’s GDP in the second quarter of 2022 contracted minus 4.4 percent. Meanwhile, GDP in the first quarter of 2022 contracted minus 4.2 percent.
Ukraine’s GDP also contracted for two consecutive quarters. this is inseparable from the ongoing war. It was recorded that GDP in the second quarter of 2022 contracted minus 37.2 percent. This contraction is much deeper than the previous quarter, namely minus 15.1 percent.