Impact of Global Financial Crises on National Economic Stagnation

Abstract

Global financial crises represent recurrent phenomena that generate systemic risks to national economic stability, particularly in developing economies such as Indonesia. The country’s dependence on commodity exports, foreign investment, and its financial sector heightens exposure to international economic disruptions. This study explores the impact of global financial turmoil on the stagnation of Indonesia’s economic growth through a literature review. Using a qualitative approach, secondary sources were collected from scholarly journals, books, and international institutional reports. The analysis reveals that crises like the 2008 subprime mortgage collapse and the COVID-19 pandemic triggered a decline in global demand, contraction of exports, withdrawal of foreign capital, and restricted banking liquidity, all of which contributed to stagnation. Critical sectors including manufacturing, property, and banking suffered significant downturns, accompanied by rising unemployment and weakened domestic consumption. Additionally, macroeconomic pressures such as inflation, fiscal deficits, and premature deindustrialization intensified. These findings highlight the importance of adaptive strategies and structural reforms to bolster resilience against future shocks.