Sri Mulyani Calls The Manufacturing PMI Reduction Due To Weak Demand

Manufacturing Illustration (ANTARA)

JAKARTA - Minister of Finance (Menkeu) Sri Mulyani said the decline in Indonesia's manufacturing purchasing manager index (PMI) in July 2024 was due to weakening demand.

Based on the latest Global Standard and Poor (S&P) report, Indonesia's manufacturing PMI July 2024 was 49.3 down compared to June 2024 of 50.7. This position shows its first contraction since August 2021 or after 34 consecutive months of expansion.

"Domestic demand has weakened, in this case exports for countries whose economies are starting to show a tendency to weaken, such as America and China," said Sri Mulyani.

He said the government would look further in terms of demand, resulting in a decline in manufacturing PMIs. The search was carried out to determine whether this demand was seasonal or a competition for imported goods. If demand drops due to competition in imported goods, especially consumer goods, we will investigate the demand side for domestic," explained Sri Mulyani.

At the same time, Sri saw that the business confidence index component for the PMI production process reached its highest level when measured since February 2024. This shows anomalies in the demand side so that it must be studied more deeply.

The Minister of Finance assessed that manufacturing manufacturers remain optimistic that production will increase as market conditions next year are predicted to strengthen in line with the IMF's projection for global economic growth in 2025 to increase to 3.3%.

Head of the Fiscal Policy Agency of the Ministry of Finance Febrio Kacaribu said that despite the negative impact of geopolitical turmoil on the global supply chain, the current condition is a momentum for industry players to strengthen competitiveness and innovate in global trade activities.

Overall, the government is still optimistic about the performance of the manufacturing sector. In the second quarter, investment in the basic metal industry grew double digits, in line with the spirit of industrial transformation, "said Febrio.