Indonesia's Manufacturing Sector Tends To Slow Down, The Ministry Of Industry Reveals Factors For The Cause

The Ministry of Industry revealed a number of factors that caused the Indonesian manufacturing Purchasing Managers Index (PMI) to slow down in recent times.

Minister of Industry (Menperin) Agus Gumiwang Kartasasmita said, a number of these factors were included in three indicators, namely stock indicators of raw materials and delivery time, labor, and domestic and export demand.

For stock indicators, raw materials and delivery times consist of inflationary pressure factors to 5.42 percent, weather influences, and foreign demand to fall due to the global recession.

Next, for labor indicators consisting of inflationary pressures to 4.35 percent, the increase in VAT to 11 percent, and raw materials are scarce due to supply chain constraints and the Russia-Ukraine war.

Then, the indicators of domestic demand and exports consisting of production delays due to overstock products.

"So that in its development there are three PMI values that are close to 50 or no significant expansion occurs. One of them is at PMI May 2023," said Minister of Industry Agus at a Working Meeting of the Ministry of Industry in the Sudirman area, South Jakarta, Friday, June 16.

Agus assessed that this condition also occurs in other countries in ASEAN and the world's major economies.

Therefore, it is necessary to understand factors that affect manufacturing expansion in Indonesia and other countries such as external factors and domestic factors.

"For external factors consisting of a global recession starting in early 2022 followed by the highest increase in inflation occurring in the third and fourth quarters of 2022, then monetary policies (interest rates, Quantitative Easing and Tappering) taken by the Fed to save the United States economy as a result of the pandemic), and the Russo-Ukrainian War caused disruption of supply chains," he said.

Furthermore, domestic factors consist of holiday moments and seasonal factors as well as rising domestic spending.

"Similarly with IKI, from January to May 2023 it is still in an expansive condition, but tends to slow down," he added.