RI Manufacturing PMI Collapses, Government Appoints China's Lockdown As The Cause

Illustration (Photo: Doc. Antara)

JAKARTA – The government through the Ministry of Finance (Kemenkeu) responded to the latest report regarding the Purchasing Managers' Index (PMI) of Indonesian manufacturing which decreased to 50.8 in May 2022 from 51.9 the previous month.

Head of the Fiscal Policy Agency (BKF) of the Ministry of Finance, Febrio Kacaribu, said that this condition was influenced by various factors. According to him, one of the most dominant is from the external side and global factors.

"Supply chain disruptions and the COVID-19 restriction policies in China have had an impact on manufacturing performance in many countries, given China's large contribution to global supply chains," he said in a press statement on Friday, June 3.

Febrio added that the collapse of Indonesia's manufacturing PMI was also experienced by many countries such as the Philippines (54.1), Malaysia (50.1), India (54.6), Eurozone (54.6) and the United States (57.0). Meanwhile, China's manufacturing PMI increased to 48.1.

"Even though our PMI slowed down in May 2022, the amount is still quite expansive (above the 50 level)," he said.

Sri Mulyani's subordinates also revealed that demand growth, both domestic and export, was still increasing. Then, employment also continues to occur in line with the expansion of production.

However, the ongoing geopolitical conflict and social restrictions in China due to the pandemic suppressed the flow of supplies and the delivery time of goods into the country in May. This condition causes the manufacturing sector to hold back in optimizing its production capacity. Then, the still high prices of input goods added to pressure on the growth of the manufacturing sector.

"Going forward, manufacturing will improve along with the relaxation of the lockdown in China. The current manufacturing production capacity continues to improve and is starting to approach the average production capacity in the pre-pandemic period," he stressed.

Furthermore, the optimism of the business world is still maintained with the continued stability of the pandemic condition and the recovery of demand that continues to strengthen. Community participation in efforts to control the COVID-19 pandemic, including vaccination programs, is effective in providing resilience to public health conditions.

"The strengthening of the economic recovery is expected to continue to increase the resilience of the domestic economy in the midst of global economic turmoil," closed Febrio.