by Nurul Fitri Ramadhani
JAKARTA, Feb. 9 (Xinhua) -- Indonesia, the largest economy in Southeast Asia, started 2025 with a solid performance in the manufacturing industry, posting an increase in the Manufacturing Purchasing Managers' Index (PMI) to 51.9.
The rise signals positive business growth and confidence.
The January PMI level was the highest since June 2024, driven by increased production and new demand from both domestic and export markets, according to the country's ministry of finance.
Febrio Nathan Kacaribu, head of the fiscal policy agency at the ministry, said that the positive development in the manufacturing sector aligned with the expansion of consumption and business activities since the end of 2024.
The expansion was evidenced by the higher Real Retail Sales Index in December 2024, which showed a 1.0 percent year-on-year increase and was 0.9 percent higher than November's growth, according to data from Bank Indonesia.
The central bank also reported that Indonesia's Consumer Confidence Index remained in the expansive zone, reaching 127.7, up from 125.9 in November 2024.
"The optimism of consumers and business actors, reflected in the retail sales index, consumer confidence, and expansive manufacturing activities, is an important capital for Indonesia to face the challenges of 2025. The government through the state budget is committed to maintaining this momentum by creating conducive conditions, protecting people's purchasing power, and maintaining the inflation level," Kacaribu said.
Based on January data released by S&P Global Market Intelligence, Indonesia was among the few Asian countries that entered the expansion zone in the PMI, along with India, which led with a level of 58, and the Philippines with 52.3. Most other countries in the region were in the contraction zone, with relatively low PMI levels, including Malaysia and Myanmar.
Febri Hendri Antoni Arief, spokesman for Indonesia's Ministry of Industry, said that the country could significantly increase its manufacturing PMI in the future if the government revoked the relaxation policy on finished product imports and implemented more pro-business strategies.
"This includes providing fiscal and non-fiscal incentives for the industry. Such strategies aim to maintain the supply of raw materials, increase investment and exports, and strengthen the competitiveness of the national manufacturing industry," Arief said.
Arief also noted that the increase in the manufacturing PMI aligned with the positive growth of the national economy.
Statistics Indonesia (BPS) recently announced that the country achieved a 5.03 percent economic growth rate in 2024. In the fourth quarter of last year, the gross domestic product (GDP) growth rate was 5.02 percent. One of the contributing factors was the growing household consumption, which reflected an improvement in people's purchasing power.
"Indonesia's manufacturing sector expanded rapidly in January, supported by a concurrent increase in output. Reflecting confidence about the future, with production expected to rise on the back of improving market demand throughout the year, firms added staff at the strongest rate for two-and-a-half years," said Paul Smith, economics director at S&P Global Market Intelligence.
"Firms also increased purchasing activity, reflecting a healthy sense of confidence about the future, increasing inventory levels at their premises," he added. ■
