Indonesia’s manufacturing sector sees sharp drop in Q2

Jakarta (VNA) - 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).

The country’s Purchasing Managers' Index (PMI) in the period was recorded at 28.55 percent - its deepest ever contraction compared with 45.64 percent in the first quarter this year.

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 third quarter despite still being in the contraction phase.
According to Markit, the manufacturing PMI of Indonesia rose to 39.1 in June 2020 from 28.6 a month earlier.

Manufacturing industry is the largest contributor to Indonesia’s Gross Domestic Product (GDP), at nearly 20 percent in the first quarter of 2020.

In addition to economic stimulus packages to help the sector cope with the COVID-19 pandemic, the Indonesian Government is also willing to provide incentives for investors, and plan to establish 27 new industrial parks by 2024.
Indonesia’s economic growth is likely to be in the range of minus 1.1 percent and minus 0.4 percent in the first half of 2020.
The government is stepping up measures with the hope that the national economy will recover with growth of between minus 1 percent and 1.2 percent in the third quarter and between 1.6-3.2 percent in the last quarter of the year./.