Positive business activity maintained despite slow growth: BI

Positive business activity maintained despite slow growth: BI

Logo of Bank Indonesia (BI). (photo: Antara)

Jakarta (ANTARA) - The latest business survey conducted by Bank Indonesia pointed to positive growth in the third quarter of 2019, despite the economy’s decelerating, compared with conditions in the previous period.

Such conditions were reflected by a weighted net balance (WNB) of 13.39 percent, down from 19.17 percent in the second quarter of 2019, according to a statement received at Jakarta on Friday.

The increase in construction activity had been the main factor for positive growth.

On the other hand, the main drag on growth was the Agricultural, Plantation, Livestock, Forestry and Fisheries sectors, and particularly the food crop subsector, due to prolonged drought.

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At the same time as slower business expansion, the most recent Business Survey also revealed lower production capacity and labour utilisation in the third quarter of 2019, which was reflected by the average production capacity being down 75.42 percent from 77.18 percent in the previous quarter.

Financially, businesses maintained solid liquidity and profitability in the reporting period, with relatively easy access to loans, notwithstanding declines, compared with conditions in the second quarter of 2019.

Respondents predicted business expansion to continue, yet fade in the fourth quarter of 2019, as indicated by a WNB of 9.13 percent, supported mainly by the construction sector and most of the tertiary sector.

Nevertheless, the respondents remained upbeat on future conditions, predicting higher investment and labour utilisation in the fourth quarter of 2019.

The prompt manufacturing index (PMI) – BI remained above the 50-point threshold, which separates expansion from contraction in the manufacturing industry, despite slowing to 52.04 percent in the third quarter of 2019 from 52.66 percent in the previous period.

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Nearly all subsectors maintained an expansive posture, with moderation nevertheless observed in terms of Food, Beverages and Tobacco, as well as Textiles, Leather Goods and Footwear.

On the other hand, the previous contraction affecting Wooden Goods and Other Forest Products persisted into the third quarter of 2019.

Moving forward, the respondents predicted business expansion to continue in the fourth quarter of 2019, despite a potential slowdown, as confirmed by a further drop in the PMI-BI to 51.90 percent.

Respondents expected slower growth in various subsectors, including Textiles, Leather Goods and Footwear; Paper and Print; Pulp, Chemicals and Rubber Articles; Cement; as well as Non-Metallic Minerals.    (INE)

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