The economic slowdown in China, one of which was the result of the property sector crisis, also became a source of world economic slowdown, including also having an impact on Indonesia. This is reflected in the value of Indonesia's exports to China in August 2023, which decreased by 6.71% compared to the same period the previous year. This condition shows a decline in world demand. On the other hand, inflation conditions eased because commodity prices decreased. This shows the preference of consumers in the world to restrain increased consumption. However, Indonesia's economy is still maintained. The Industrial Confidence Index (IKI) for September 2023 still shows expansion values.

"The Industrial Confidence Index for September 2023 reached 52.51 or continued to expand even though it slowed down 0.71 points compared to August 2023," said Spokesperson for the Ministry of Industry (Kemenperin) Febri Hendri Antoni Arif in a press release on the Ministry of Industry website, Friday (29/9).

The decrease in the IKI value was due to an increase in product inventories in almost all manufacturing subsectors. This condition shows that production in September 2023 has not been widely absorbed in both export and domestic markets.

However, the development of the National Capital City (IKN) is considered to be one of the drivers of the Indonesian economy, especially manufacturing industries such as the cement industry. The development of the National Capital City (IKN) is estimated to contribute to national cement sales of around 800,000 to 1 million tons per year.

Apart from that, Febri explained that the large number of imported goods circulating domestically contributed to the decline in IKI in the past three months, especially for sectors whose IKI experienced contraction, such as the textile and textile products (TPT) industry and the ceramics industry.

Apart from that, in general industry confidence in September 2023 is still stable. As many as 44.8% of business actors stated that their business conditions in September were constant or stable. Meanwhile, 17 industrial subsectors are still expanding with a contribution of 88.2% to the GDP of the non-oil and gas processing industry in the second quarter of 2023.

The base metal industry subsector experienced an increase in the IKI value and changed from contraction to expansion in September 2023. Fulfilling demand for IKN development is thought to have boosted the performance of the base metal industry.

Febri explained that in September 2023 there were six subsectors with IKI values experiencing contraction and contributing 11.8% to the GDP of the non-oil and gas processing industry in the second quarter of 2023. Subsectors that experienced contraction in September included the textile industry; apparel industry; wood, wooden goods and cork industry; non-metallic minerals industry; furniture industry; and other processing industries. For the non-metallic mineral goods industry, the contraction was caused by a decrease in production in the glass and ceramics industry, while the cement industry reported an increase in production.

Even though it is still expanding and most business actors are still optimistic about conditions in the next six months, the level of pessimism among business actors is quite worrying in September 2023. Business actors who said they were pessimistic increased by 2.4% to 11.6%. This is due to uncertainty in the global market. Apart from that, the increase in energy prices also increases the level of pessimism among business actors.

Judging from the forming variables, the new orders and production variables experienced expansion. Although if you look at the data, imports of raw or auxiliary materials in August decreased by 4.13% compared to the previous month or month to month (MtM) and imports of capital goods fell by 4.55% (MtM). On the other hand, the product inventory variable experienced a contraction. There was a decrease in the index value for the product inventory variable from 51.85 to 47.40 or a decrease of 4.45 points.

If we look at the IKI value per subsector, in other processing industries it is observed that the IKI has contracted more deeply. This is due to the decline in product exports in traditional markets with conditions in traditional export destination markets such as China, America and Europe experiencing an economic slowdown.

Some products have shifted to looking for new markets, such as the false eyelash industry and the musical instrument industry. The Ministry of Industry is trying to include this industry in foreign exhibitions. However, the jewelry industry is still experiencing expansion and has a high export contribution apart from traditional musical instruments and children's toys.