Economists Call Indonesia's Manufacturing Industry Potentially Slowing Down

Head of Bank Permata economist Josua Pardede. (Photo: Doc. ANTARA)

JAKARTA - The performance of Indonesia's manufacturing industry has weakened due to the decline in people's purchasing power as reflected in the S&P Global noting that Indonesia's Manufacturing Purchasing Managers (PMI) are at the level of 50.7 or a decrease of 1.4 points compared to May 2024 which is at the level of 52.1.

In addition, data from the Ministry of Finance (Kemenkeu) shows that in May 2024 tax revenue from the processing industry decreased by 14.2 percent net and by 3.2 percent grossly.

In fact, this sector is the largest contributor to tax revenues in May 2024.

Head of Bank Permata economist, Josua Pardede, said that from the three components that formed the Industrial Trust Index (IKI) of the Ministry of Industry (Kemenperin), it showed a slowdown in the production component recorded contraction, while new inventory and order components were still recorded to have increased.

He added that the weakening of the rupiah caused an increase in production costs and in the end the company decided to reduce its production level in June 2024.

"Three components forming PMI Manufacturing (Output, New Orders, Input Purchases) have grown, but are the weakest in the past year," he explained in his statement, Tuesday, July 2.

Josua said, one of them, namely the new Orders, especially from exports, continued to decline for four months.

Purchase of input goods is also the weakest since November 2022, so an indication that production is starting to slow down.

Based on these data, the manufacturing industry is still expanding in June, but there are indications of a slowdown in production from the previous month.

"When viewed from the sub-sector (from the release of IKI), the contraction sub-sector is the Textile Industry," he explained.