Ministry of Finance: China's Economic Slowdown Has Limited Impact on Republic of Indonesia

Illustration (Photo: Doc. Antara)

JAKARTA – The Ministry of Finance (Kemenkeu) stated that it continues to follow China's economic developments which are showing signs of a slowdown and its impact on Indonesia.

Head of the Ministry of Finance's Fiscal Policy Agency (BKF) Febrio Kacaribu revealed that China is one of Indonesia's strategic trade partners and the slowdown is believed to have a propagation effect on the national economy. Even so, Febrio stressed that the excesses generated this time were still quite limited.

"We see that there is indeed a risk from China's economic slowdown even though (they) have reopened the economy," he said at a press conference on the state budget recently.

Febrio explained that after the reopening of productive activities in the East Asian country, the level of production produced was not as expected.

"This can also be seen from the Chinese manufacturing Purchasing Managers Index (PMI), which is still in the contraction zone," he said.

For information, the reopening of China's economy at the beginning of the year brought great hopes for a revival of the world economy. This is because China is a global production base country that is connected to the supply chains of many countries.

China's economic slowdown can mean pressure for countries that supply raw materials. Vice versa, when their economy is moving fast, the demand for raw materials is quite high.

Quoting information released by the Ministry of Finance, it is known that China's manufacturing PMI is at the level of 49.2. The figure falls under the expansion category because it doesn't reach level 50.

Meanwhile, Indonesia continued to show positive progress by recording a manufacturing PMI of 53.3 or continuing its expansionary record for 23 consecutive months.

Meanwhile, China's economic growth at the end of the second quarter of 2023 was 6.3 percent year on year (yoy) and Indonesia was recorded at 5.17 percent.