Industry Sector Improves Despite Global Economic Slowdown

Sat, 29 Apr 2023 11:07 | News | Editorial INTI

INTI,- The positive growth of the main trading partners' economies in April 2023 has driven the performance of Indonesia's non-oil and gas processing industry to improve this month, despite the global economic slowdown. This is reflected in the increase in trading activity in several of Indonesia's main trading partners. In addition, controlled inflation in trading partner countries and declining commodity prices have also encouraged the industry to continue to expand. The momentum of the Hari Raya holiday in April also contributed to the performance improvement of some non-oil and gas processing subsectors. This is reflected in the April Industry Confidence Index (IKI), which returned to the expansion phase.

"The April 2023 Industry Confidence Index (IKI) reached 51.38, a decrease of 0.49 points compared to March 2023," said the spokesperson for the Ministry of Industry (Kemenperin), Febri Hendri Antoni Arif, when releasing the April IKI in Jakarta on Friday (28/4).

Despite the slowdown, in April 2023 there was an increase in the number of subsectors that experienced expansion, namely 15 subsectors compared to March 2023, which only had 14 subsectors, with a share of Non-Oil and Gas Processing Industry GDP in 2022 reaching 80.2%. This share was supported by subsectors that made a significant contribution, such as the Food Industry; Chemical and Chemical Product Industry; and the Motor Vehicle, Trailer, and Semi-Trailer Industry.

Looking at its component variables, all of the IKI's component variables in April 2023 experienced expansion. However, upon closer inspection, the decline in the IKI value was due to a decrease in the Inventory variable by 2.67 points to 52.33, indicating an increase in inventory stock, and the New Orders variable decreased by 0.76 points to 50.57, indicating a decrease in new orders. On the other hand, the Production variable increased from 50.69 in March 2023 to 52.08 in April 2023. Domestic Orders still dominated the variable that influenced the New Orders index.

Febri explained that the decline in the IKI was due to several subsectors with significant PDB shares that experienced contraction after previously expanding. Secondly, the order variable, the largest variable that influenced the IKI value, experienced a decline this month. This was due to the high demand for household items during Ramadan and Hari Raya, which caused the prices of manufactured products to rise. On the other hand, production and government spending decreased significantly. In addition to the high prices, limited working hours during Ramadan and Hari Raya were also a factor in the decrease in orders. It is believed that domestic orders will increase next month as the industry begins to produce normally. This is a seasonal pattern that does not need to be worried about.

"Most business actors stated that their business conditions in April 2023 were generally stable, at 45.2%, and 28.7% said that their business activities had increased compared to March 2023," added Febri.***.Hans