Indonesia’s manufacturing sector sees sharp drop in Q2
Factory activity in Indonesia fell to its lowest level ever in the second quarter, as the COVID-19 pandemic caused a slump in demand and disrupted supply chains, according to a survey conducted by the Bank Indonesia (BI).
Illustration of factory activity in Malang, East Java. (Photo: https://www.thejakartapost.com)
Jakarta (VNA) - Factory activity in Indonesia fellto its lowest level ever in the second quarter, as the COVID-19 pandemic causeda slump in demand and disrupted supply chains, according to a survey conductedby the Bank Indonesia (BI).
The country’s Purchasing Managers'Index (PMI) inthe period was recorded at 28.55 percent - itsdeepest ever contraction compared with 45.64 percent in the first quarter thisyear.
According to the bank, all manufacturing sectors tumbled in the second quarter,with deepest contraction recorded in textile and leather industries. The central bank expects all sectors to pick up in the thirdquarter despite still being in the contraction phase. According to Markit, the manufacturing PMI ofIndonesia rose to 39.1 in June 2020 from 28.6 a month earlier.
Manufacturing industry is the largest contributor toIndonesia’s Gross Domestic Product (GDP), at nearly 20 percent in the firstquarter of 2020.
In addition to economic stimulus packages to help the sector cope with theCOVID-19 pandemic, the Indonesian Government is also willing to provideincentives for investors, and plan to establish 27 new industrial parks by2024. Indonesia’s economic growth islikely to be in the range of minus 1.1 percent and minus 0.4 percent in thefirst half of 2020. The government is stepping up measureswith the hope that the national economy will recover with growth of betweenminus 1 percent and 1.2 percent in the third quarter and between 1.6-3.2percent in the last quarter of the year./.
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Illustration of factory activity in Malang, East Java. (Photo: https://www.thejakartapost.com)
