Indonesia's Business Activity Performance Declined in Q3 2022

Bank Indonesia's (BI) Business Activity Survey (SKDU) results indicate a slowdown in business activity in the third quarter of 2022. This is reflected in the Weighted Net Balance (WNB) value of 13.89%.

This figure is lower than the WNB in the second quarter of 2022, which stood at 14.13%. The slowdown in business activity is evident in the agriculture, plantation, livestock, forestry, and fisheries sectors, particularly the food crop subsector. This occurred concurrently with the start of the planting season.

Other sectors that also experienced a slowdown include trade, hotels and restaurants, and transportation and communication. The Trade, Hotels, and Restaurants sector recorded a WNB of 2.60%, lower than the 3.61% in the second quarter of 2022. This is in line with declining demand. Similarly, the transportation and communication sector recorded a WNB of 0.87%, lower than 2.06% in the previous quarter.

Despite this, several sectors recorded positive growth, supporting overall business activity. These include the finance, real estate, and corporate services sectors, with a WNB of 2.76%, higher than the 1.62% WNB in the previous quarter.

The manufacturing sector also recorded a WNB of 3.18%, higher than the 2.19% in the second quarter of 2022. This was driven by adequate storage capacity, the availability of production facilities, and sustained domestic demand.

On the other hand, capacity utilization in the third quarter of 2022 was recorded at 73.67%. Labor utilization indicated a slowdown, although it remained in the expansion phase. Meanwhile, the financial condition of businesses remained relatively good in terms of liquidity and profitability, accompanied by easier access to financing.

In the fourth quarter of 2022, respondents predicted a further slowdown in business activity, with a WNB of 12.63%. The projected strong business activity in the fourth quarter is expected in several key sectors, namely Trade, Hotels and Restaurants, and Transportation and Communication, in line with anticipated increased domestic demand during the National Religious Holidays (HBKN) of Christmas.