The IHS Markit Indonesia Manufacturing Purchasing Managers’ Indexes (PMIs) showed lowest in Asia and in the country’s history. Accordingly, the index fell significantly to 27.5 in April from 45.3 in March.
The major decline in factory activities is the result of measures to curb coronavirus pandemic in the country. The mass temporary closure of factories in the country has been disrupting manufacturing activities at a major scale.
The Finance Minister Sri Mulyani has been looking into the problems since last month. She further predicted that the condition will last until May 2020 before beginning to bounce back to normal.
“The peak happened in April and potentially lasts until May 2020,” she explained.
Despite the sharp decline in the industry, the minister is optimistic that the country’s economic growth in Q1 2020 can exceed 4%. She foresaw that the growth ranges between 4.5% to 4.7%.
“We estimate that (the economy) can still grow between 4.5% to 4.7%. Our economic growth in the first quarter is still above 4%,” she added.
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Indonesia Manufacturing, Currently the Worst in Asia
Indonesia manufacturing PMIs are currently the worst in Asia. Finance Minister Sri Mulyani said in a teleconference that the figure plunged deeper than its neighboring countries.
“The figure dropped lower than other Asian countries, lower than even Japan and South Korea,” she explained.
Pandemic has actually jeopardized manufacturing activities in numerous Asian countries, not only Indonesia. Governments’ decisions to implement lockdown have damaged productivity and slashed off demands.
The PMIs in the continent plunged into either an all-time low or similar levels seen during 2008-2009 global financial crisis. In Southeast Asia alone, PMIs plunged down below 50.
Although China and some other countries have started to begin reopening its economy, that does not bring much difference to the economic growth. This condition will require time to recover due to weak export sector prospects in the global context.
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