Indonesia's Manufacturing Grows Positively, Ministry Of Finance Reveals Driven By Increased Production

JAKARTA Indonesia's manufacturing activity has increased significantly, marked by an expansion in December 2024.

Head of the Fiscal Policy Agency, Ministry of Finance, Febrio Kacaribu said that throughout 2024, Indonesia's Pur-chasing Managers' Index (PMI) showed the dynamics of the manufacturing sector, with seven times in the expansion zone and five times in the contraction zone.

"Indonesia's Pre-chasing Managers' Index (PMI) increased from 49.6 in November to 51.2 in December 2024," he said in his statement, Sunday, January 5.

Febrio said this figure was the highest level since May 2024 driven by new production and demand increases, both from the domestic and international markets, which increased ahead of Christmas and New Year's celebrations.

On the other hand, several ASEAN countries with manufacturing-based economies, such as Vietnam and Malaysia, recorded contracting manufacturing PMIs, with PMIs at 49.8 and 48.6 levels, respectively.

Indonesia's manufacturing activities, which returned to the expansion zone, are good news at the beginning of this year, reflecting the Indonesian economy which remains solid in the midst of various challenges, both global and domestic. The government is increasingly optimistic that economic growth of more than 5% for 2024 can be achieved," he said.

According to him, the strong domestic demand for domestic products also supports the performance of the manufacturing sector.

Meanwhile, the Retail Sales Index (IPR) recorded an annual increase of 1.7 percent (yoy) in November 2024 compared to October 2024 1.5 percent and the Bank Indonesia Consumer Confidence Index (IKK) in November 2024 rose significantly to the level of 125.9 compared to October 2024 121.1.

Febrio said the development of the indicator reflects the increasing purchasing power and public optimism for better economic conditions amid the development of manageable inflation.

In addition, Febrio said that based on the PMI component, the increase in the number of individual goods reflects the optimism of business actors in the demand for Indonesian manufacturing products. This increase in manufacturing activity was also followed by more expansive employment.

The optimism of consumers and business actors, reflected in the index of retail sales, consumer confidence, and expansionary manufacturing activities, is an important capital for Indonesia to face the challenges of 2025. Domestic consumption and industrial activities remain the main pillars of economic growth," he said.