The Ministry of Industry (Kemenperin) continues to monitor global economic conditions. Judging from the Purchasing Managers' Index (PMI) of Indonesia's trading partners, such as the United States and the European Union, conditions are currently unstable because they are still contracting until June 2023. Furthermore, the European Union is also still raising interest rates to 4.0% in June 2023 to reduce inflation. On the other hand, the majority of leading commodities are showing price declines until June 2023, both on a monthly and annual basis, in line with uncertainty and weakening global demand. The WTO predicts that the volume of world trade will slow down by 1.7% in 2023. These global market conditions also affect the performance of Indonesia's exports, which experience a decline in value in June 2023, as well as imports.
"The Industrial Confidence Index (IKI) in July 2023 reached 53.31. This means that it will continue to expand even though it has slowed down by 0.62 points compared to June 2023," said Spokesperson for the Ministry of Industry (Kemenperin), Febri Hendri Antoni Arif, during the July 2023 IKI release in Jakarta, Monday (31/7).
The slowdown in the IKI in July 2023 was driven by a decrease in the IKI in several industrial sub-sectors which initially expanded into contraction, including the Garment Industry, Basic Metal Industry, Wood and Cork Goods Industry, Non-Metal Mineral Goods Industry, and the Machinery Repair and Installation sub-sector/ Tool. While 2 sub-sectors are still experiencing contraction, namely the Textile and Other Processing industries. Nonetheless, the share of the expansion sub-sector in the GDP of the Non-Oil and Gas Processing Industry for the first quarter of 2023 is still quite high, namely 83.1% of the 16 sub-sectors that are experiencing expansion.
Febri explained, in general, industry confidence in July 2023 was still very good because several large sub-sectors such as the food industry, motor vehicle industry, beverage industry, and electrical equipment industry experienced increased expansion. In addition, encouraging news was obtained from the leather, leather goods and footwear industry sub-sector, the IKI value for the July 2023 period experienced a very significant increase of 7.85 points, which was the first time it had expanded. When viewed from the components, this is influenced by the increase in the volume of new orders both abroad and domestically. Other sub-sectors that also experienced significant increases in IKI scores were the pharmaceutical industry, chemical medicinal products and traditional medicines (5.41 points), printing and reproduction of recording media (5.40 points), and electrical equipment (3.77 points).
