National Industrial Sector Remains Sluggish

The Indonesian industrial sector continues to show sluggishness. This is reflected in the growth of the non-oil and gas processing sector, which has remained below national economic growth since 2016. As is known, the contribution of the non-oil and gas processing sector fell to 17.36% of the national Gross Domestic Product (GDP), compared to 18.2% at the end of 2015.

As shown in the graph, the national economy grew by 5.03% (YoY), while the non-oil and gas processing sector only grew by 4.43% (YoY) in 2016. In the second quarter of 2019, the non-oil and gas processing sector grew by only 3.98%, again below the national economy which grew by 5.05%. The non-oil and gas manufacturing sector even slumped, growing only 2.56% due to the impact of the 2009 global financial crisis.

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For information, Indonesia's manufacturing index (Purchasing Manufacturer's Index/PMI) in September 2019 only rose slightly by 0.1 points to 49.1. An index below 50 indicates contraction or sluggishness, while above 50 indicates expansion. The ongoing trade war between the United States and China has caused some businesses to postpone expansion, even though interest rates are starting to fall.