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Uncontrolled pandemic haunts Indonesia’s manufacturing expansion
IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) for Indonesia, a gauge of the country’s manufacturing activity, rose to 50.6 points in November from 47.8 a month before.
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Women’s world: Workers produce cigarettes at a factory in Malang, East Java. The government has increased its tobacco excise as part of efforts to boost state revenue. (JP/Aman Rochman)
I
ndonesia’s manufacturing activity improved in November, driven by higher production as factories reopened and demand improved after the lifting of social restrictions. But the risks of deteriorating activity continues to loom with the COVID-19 outbreak remains out of control.
IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) for Indonesia, a gauge of the country’s manufacturing activity, rose to 50.6 points in November from 47.8 a month before. A value above 50 indicates an expansion against the previous month, while a reading below 50 reflects a contraction.
“The move to transitional PSBB [large-scale social restrictions] measures provided a boost for Indonesia’s manufacturing sector midway through the fourth quarter,” IHS Markit principal economist Bernard Aw said in a statement on Tuesday. "The upturn was largely driven by a record rise in production amid widespread reports of factory reopening and improved demand.”
The Jakarta administration decided to lift its second PSBB in mid-October and move to loosened transitional measures despite a significant jump in virus cases. Indonesia passed half a million cumulative COVID-19 cases on Nov. 23 and has recorded more than 549,000 cases as of Wednesday, official data shows.
The coronavirus outbreak has disrupted business activity, paralyzing the economy and causing millions of people to lose their jobs this year. Indonesia plunged into recession for the first time in two decades as the government struggled to control the outbreak and its economic fallout.
Read also: Year-end holidays won’t spur consumption if COVID-19 uncontrolled: Economists
The manufacturing industry contributed around 19 percent to gross domestic product (GDP), the highest among other business sectors, but contracted 6.19 percent in the second quarter and 4.31 percent in the July-September period as a result of cooling domestic and global economic activity.
