Four Industrial Sectors Contracted

VIVAnews - The global crisis has caused business activities to decline by 56 percent in the fourth quarter of 2008. There are at least four economic sectors that have contracted.

The biggest decline is suffered by the manufacturing and mining and excavating industry. The business contraction happened for the first time after it had been expanding for six periods of survey.

From the Business Activity survey which is quoted from the Bank Indonesia's site on Monday, 16 February, it is said that falling demand, both domestic and international, as a result of the global economic crisis results in business contraction during the fourth quarter in 2008. In addition, other factors that had caused business contraction are, amongst other: seasonal factor effect, competition on the same type of product, and worsening market conditions.

Based on the economic sector, the decline in business activities happens in four economic sector with the the manufacturing industry suffering the most (-2.75 percent), followed by mining and excavating sectors (-2.38 percent), agricultural, livestock farming, forestry, and fishery sector (-0.57 percent) and construction sector (-0.29 percent).

Meanwhile, five other economic sectors still experience business expansion even though it is slower compared to the last quarter. The biggest expansion is experienced by the financial, rental, company service sector (2.68 percent), followed by commerce, hotel and restaurant sectors (0.58 percent) and distribution and communication sectors (0.51 percent).

Quarter I, 2009

The survey's result shows that during the first quarter of 2009, the respondents predicted that business activities will continue to slow down and will reflect on weighted net balance (SBT) 1.14 lower than the business prediction on the last survey (SBT 14.00 percent).

The declining optimism on the prediction started in the third quarter of 2008 along with the worsening global economic condition. The economic sector predicted to experience contraction in the first quarter of 2009 are the manufacturing industry (-2.11 percent), services sector (-0.17 percent) and construction sector (-0.10 percent).

However, there are some economic sectors that is predicted to experience expansion, i.e.: agricultural, livestock farming, forestry, and fishery sectors (SBT 1.83 percent) and financial, rental, and company service (SBT 1.32 percent).

The stimulating factor in those sectors are the supporting season/weather conditions and the upcoming harvest season in the agricultural sector, especially in food plants sub-sector, domestic request in the financial sector, rental and company services, and the increase in interest income especially in banking sub-sector.

Based on the economic sub-sectors, the biggest contraction is predicted to happen in transportation, engine and tools sub-sectors (-1.82 percent). However, again,  there are several sectors that are predicted to continue to grow with the support from food plant sub-sector (1.67 percent) and banking sub-sector (SBT 1.18 percent).

Labor

Along with the decrease in business activities on the fourth quarter of 2008, labor use has also decreased for -2.65 percent. The decrease in labor use occurred in five economic sectors. The manufacturing industry has the highest decrease of labor use with -2.98 percent, followed by agricultural, livestock farming, forestry and fisheries sectors (-0,43 percent) and commerce, hotel and restaurant sectors (-0.34 percent).

However, there are still some economic sectors which experience an increase in labor use, i.e. financial, rental, and service company which are the highest sectors contributed to the increase of labor use for SBT 0.87 percent. Based on economic sub-sectors, transportation industry, machinery and tools sub-sector are the highest contributors to the decrease of labor use (-1.56 percent). Meanwhile, the banking sub-sector is the highest contributor in the increase of labor use (0.66 percent).

Labor use during the first quarter of 2009 is predicted to experience a slight increase, lower than last quarter's prediction. It is shown by SBT 0.47 percent in the first quarter of 2009 or slower than the last quarter (SBT 4.37 percent). The deceleration happens in almost every sector with some even have labor use decrease just like in manufacturing industry (-2.73 percent) and agricultural, livestock farming, forestry and fisheries sectors (-0.09 percent). The high contribution from the manufacturing industry happens because almost all sub-sectors in the industry are reducing labor use except for the food, beverage and tobacco industries.  

Meanwhile, financial, rental and service company sectors are estimated to experience an increase in labor use during the first quarter of 2009 by as much as 1.89 percent, slightly higher than the last period of SBT 1.76 percent. More over, the banking sub-sector becomes the hope to absorb a high number of labor (1.26 percent).

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Translated by: Ariyantri E. Tarman