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Rebound in Indonesia’s manufacturing activity hinges on pandemic handling
The headline figure of Indonesia’s manufacturing Purchasing Managers’ Index (PMI) fell to 47.2 in September from 50.8 in August. A reading below the threshold point of 50 indicates a contraction in activities from the previous month.
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Workers leave the Beesco Indonesia factory in Karawang, West Java, on June 3. (Antara/M Ibnu Chazar)
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rebound in Indonesia’s manufacturing sector will depend in large part on the country’s handling of the COVID-19 pandemic, analysts have warned.
The headline figure of Indonesia’s manufacturing Purchasing Managers’ Index (PMI) fell to 47.2 in September from 50.8 in August. A reading below the threshold point of 50 indicates a contraction in activities from the previous month.
The manufacturing PMI, a monthly survey of 400 manufacturers to gauge the trend in the sector from business information provider IHS Markit, showed a sign of deterioration for the first time after steadily recovering from a record-low in April.
Once Jakarta lifts its second large-scale social restrictions (PSBB) and purchasing power recovers, the index is expected to slightly rise again, said Andry Satrio Nugroho, the head of the Center of Industry, Trade and Investment at the Institute for Development of Economics and Finance (Indef).
He, however, projects the PMI to still hover at levels below the 50 threshold, at least through the beginning of next year’s first quarter amid a sluggish economy.
“All these projections are based on the assumption that the daily COVID-19 cases can be controlled,” Andry told The Jakarta Post via text message on Friday. “So, surveillance is the key the government needs to apply if it wants the economy [to recover at the same time].”
