Resilience in Crisis: Examining the Impact of Interest Rates, Trade Openness, and Unemployment on Indonesia’s Economic Recovery from COVID-19

Abstract

This paper attempts to capture the contribution of real interest rates, trade openness, and unemployment to Indonesia's economic recovery after the COVID-19 crisis. Using multiple linear regression on annual data from 2011 to 2023, the study examines the influence of the three variables on Indonesia's GDP growth throughout the recovery phase. By incorporating a dummy variable for the post-crisis period, the analysis captures shifts in economic dynamics after 2021. The findings show that trade openness and unemployment significantly impact GDP. Trade openness has a negative relationship with GDP, suggesting that reliance on international markets may have hampered recovery. Unemployment also shows a negative association with GDP, underscoring the importance of labor market stability in supporting economic resilience. Although real interest rates did not demonstrate statistical significance, they are main influential in shaping the economic environment, signaling the value of a balanced approach to monetary policy in crisis recovery. The study theoretically contributes to how economic resilience in emerging markets is viewed by highlighting the interactions between monetary, trade, and labor market variables. The findings also have some important implications for policymakers, who will be reminded that reducing unemployment and helping to boost local industry is important in fostering growth. Additionally, cautious adjustments in trade policy may enhance stability, particularly during times of global uncertainty. Future research could expand by examining sector-specific impacts, a more granular timeframe, or comparative.