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Jakarta Post

Recession or secular stagnation?

  • Winarno Zain
    Winarno Zain

    Commissioner in a publicly listed oil and gas service company

Jakarta   /   Wed, September 18, 2019   /  06:03 pm
Recession or secular stagnation? As economic growth slows down, more countries have turned to more protectionism by erecting more barriers against goods and services from other countries to save their industries. (Shutterstock/Number1411)

Warning signs that the global economy is slipping into recession have intensified as growth in major industrial economies continues to weaken. There are two indicators used by the markets to predict whether an economic recession is imminent. One is the length of the business cycle. Since the global financial crisis of 2008-2009, growth in developed economies has been on a path of recovery, albeit at a slow rate. The recovery has been running for 10 years in 2019. The business cycle dynamics suggest that after this long period of growth, the economy would slip into recession. The second indicator that is viewed by the market as a harbinger of recession is the yield on the 10-year United States Treasury bond. The long-term interest rate has dropped to below 2 percent. This is because amid uncertainty, investors would rather buy 10-year US Treasury bonds as a safe haven for their i...

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.