Indonesia's Industry Confidence Index Reached 51.32 at the End of 2023

The Ministry of Industry (Kemenperin) reported that Indonesia's Industrial Confidence Index (IKI) reached 51.32 points in December 2023.

This figure weakened by 1.11 points compared to November 2023, which was 52.43. However, this value increased by 0.42 points compared to the IKI value in December 2022 of 50.90 points.

Over the past year, the lowest IKI score was recorded in October 2023 at 50.70. Meanwhile, the highest value was recorded in June 2023 at 53.93 points.

Kemenperin's report also mentions that 15 sub-sectors expanded contributing to 86.3% of the non-oil and gas manufacturing industry's GDP in Q3 2023. Meanwhile, 8 sub-sectors contracted by 13.7%.

Agus Gumiwang Kartasasmita, Minister of Industry, stated that since the IKI was launched in November 2022, its value has fluctuated but remained in the expansionary position.

"All of the above macro developments show that we have succeeded in maintaining the industrial sector's productivity and competitiveness amidst the global economic recovery," said Agus during a year-end conference with the media in Denpasar, Bali, on Thursday (28/12/2023).

The IKI assessment parameters are as follows:

* 0 < IKI < 50: contraction
* IKI = 50: stable
* 50 < IKI < 100: expansion or optimistic

(Also read: After Soaring, Industrial Confidence Index Falls Again in July 2023)

2024 Projection

Kemenperin identified various obstacles and challenges due to the impact of geoeconomics and geopolitics, which are likely to persist in 2024.

First, global economic growth is expected to slow down due to weakening economic growth in China and European countries, resulting in weaker global demand and decreased demand for products.

Second, there will be a depreciation of the exchange rate due to monetary policies in developed countries to curb inflation by raising interest rates. Third, if the Ukraine-Russia and Palestine-Israel conflicts prolong, it could disrupt regional stability, triggering price increases in commodities, food, and energy.

Fourth, the 2024 General Election will have a positive impact on the national industry on one hand, but on the other hand, there is a possibility that investors will adopt a wait-and-see approach while waiting for the definitive inauguration of the president and vice president.

"Along with the expectation of improving global and national economic conditions, we estimate that the growth of the non-oil and gas manufacturing industry in 2023 will be 4.81% and the target for 2024 is 5.80%," said Agus.

(Also read: Realization of Industrial Investment Strengthens During the COVID-19 Pandemic, This is the Trend of the Last 7 Years)