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Association expects textile investments to shrink next year
While API expects the global economic slowdown to continue next year to weaken export demand for locally made textiles, Kadin's Sarman expressed optimism about investor confidence and the government's proven record in surpassing its investment targets.
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Workers produce knitwear on March 6, 2020 at Rajong Binong Jati Center in Bandung, West Java. (Antara/Raisan Al Farisi)
T
he Indonesian Textile Association (API) forecasts investments in the industry to shrink next year amid expectations of a continuing slowdown in global economic growth.
API chairman Jemmy Kartiwa Sastraatmaja said the global economy was not in good shape and was projected to enervate, while interest rates would remain high for a long period of time.
“Therefore, investment will be very slow, whether domestic or foreign,” Jemmy said, as quoted by Kontan on Tuesday.
He pointed out that the Federal Reserve rate had been hovering between 5.25 and 5.5 percent and that the United States’ central bank would only start cutting its rate at the end of the second quarter of 2024.
The effect of this move would only start materializing in 2025, Jemmy continued, so it would negatively affect the purchasing power of importing countries. This in turn would affect the capacity utilization rate of the textile industry in exporting countries, including Indonesia, where the rate stood at 50 percent, the weakest level since 2020.
The International Monetary Fund (IMF) has projected that the world economy would see slower annual GDP growth of 2.9 percent in 2024, slightly lower than this year’s projection of 3 percent, which was a significant downturn from 3.5 percent in 2022.
Following weakening global demand amid a drop in the GDP growth of developed countries, Indonesia’s textile and footwear industries went through a rough patch this year. This led to mass layoffs of thousands of workers, as the industries could barely stay afloat by relying on the domestic market alone.
