Indonesia’s Manufacturing Sector Expands Despite Contractions in Other G20 Countries

manufacturing sector

Sri Mulyani Indrawati, the Minister of Finance, has announced that Indonesia’s Manufacturing Purchasing Managers’ Index (PMI) continued to expand at the beginning of the year, even surpassing some G20 and ASEAN countries.

The expansion of Indonesia’s PMI occurred amidst the contraction of many major countries, including the United States (US), Japan, and China.

It was recorded that Indonesia’s Manufacturing PMI in January 2023 increased to 51.3 from the previous month’s level of 50.9.

Sri Mulyani stated that in Asia, only Indonesia and India had Manufacturing PMIs in the expansion zone, while Vietnam and Malaysia’s Manufacturing PMIs were in the contraction zone in January 2023.

“At the same time, compared to G20 and ASEAN-6 member countries, only three countries recorded an acceleration in Manufacturing PMI, namely Indonesia, Thailand, and the Philippines,” she said during the APBN Kita press conference on Wednesday (22/2/2023).

Meanwhile, 17.4 percent of countries experienced a slowdown, although their Manufacturing PMI was still in the expansion zone, including Australia, Russia, India, and South Africa.

Another 17.4 percent of countries experienced a recovery in Manufacturing PMI from the previously contracted zone, including Italy, France, Turkey, Canada, and Singapore.

On the other hand, Sri Mulyani stated that 52.2 percent of countries recorded a contraction in Manufacturing PMI, including the US, Mexico, Europe, the UK, Germany, South Korea, Japan, China, Brazil, Malaysia, Vietnam, and Singapore.

“So in this regard, if Indonesia’s PMI is positive above 50 and is expanding or accelerating, we are only a small group of countries,” she said.

According to her, this reflects the resilience of Indonesia’s economy and its solid recovery towards the end of last year, which continues into the beginning of this year. As known, Indonesia’s economy recorded solid growth of 5.3 percent in 2022.

“If we look at other countries, they may recover and then decline, but Indonesia’s economic growth has been maintained at above 5 percent for five consecutive quarters,” explained Sri Mulyani.

She added that early indicators of the domestic economy until early 2023 were also quite strong, as demonstrated by the Consumer Confidence Index (IKK), which remained stable at a high level of 128.16. This shows confidence and optimism toward the future economy.