BI Brings Bad News: Processing Industry Is No Longer Expansive In The Second Half, Emergency PPKM Becomes The Culprit

JAKARTA - Bank Indonesia (BI) estimates that the impact of the implementation of the Emergency Community Activity Restriction (PPKM) will likely impact the development of the Prompt Manufacturing Index (PMI) in the third quarter of 2021.

Head of the BI Communications Department Erwin Haryono said the performance of the manufacturing sector has the potential to slow down in the early second half of 2021 with an estimated PMI figure of 49.89 percent or lower than the achievement in the previous quarter.

"The decline in PMII was due to a decrease in the majority of its constituent components, especially production volume, finished goods inventory volume, and the total number of workers who were in the contraction phase," he said as reported by the official website, Wednesday, July 14.

Erwin added that the majority of sub-sectors are expected to slow down, especially the paper and printed goods sub-sector, the food, beverage and tobacco sub-sector, and the transportation equipment, machinery and equipment sub-sector.

To note, the performance of the manufacturing sector in the second quarter of 2021 has increased and is in the expansion phase. This is reflected in the figure of 51.45 percent, compared to 50.01 percent in the first quarter of 2021 and 28.55 percent in the second quarter of 2020.

"The increase in PMI in the second quarter of 2021 is in line with the development of the manufacturing sector activity as a result of the increasing Business Activity Survey (SKDU)," said Erwin.

Meanwhile, an increase occurred in almost all components that make up PMI, especially production volume and total order volume which are in the expansion phase.

By sub-sector, the majority of respondents experienced an increase in performance in the second quarter of 2021, especially the food, beverage and tobacco sub-sector, the paper and printed goods sub-sector, and the fertilizer, chemical and rubber goods sub-sector which is already in the expansion phase.

"Respondents stated that the increase was driven by increased demand during Ramadan and Eid," concluded Erwin.