BPS: Manufacturing slowdown triggered by coal and refinery contraction

The Central Statistics Agency (BPS) revealed that the slowdown in the processing or manufacturing industry’s growth in the second quarter of 2026 was mainly driven by a contraction in the coal and oil and gas refining sub-sectors. The processing industry grew 4.52 per cent year-on-year (yoy) in the second quarter of 2026, decelerating from 5.68 per cent (yoy) in the same period the previous year. “Non-oil and gas is good. But the oil and gas industry, especially the oil and gas refining industry, experienced negative growth,” said Deputy for Balance Sheet and Statistical Analysis at BPS, M. Edy Mahmud, during a press conference in Jakarta on Wednesday. Edy further explained that the coal and oil and gas refining industries contracted by 3.97 per cent (yoy) in the second quarter of 2026 and by 0.15 per cent cumulatively (ctc) in the first half of 2026. According to him, the contraction in these two sub-sectors suppressed the overall growth of the processing industry, even though the non-oil and gas industry still showed good performance. Conversely, the non-oil and gas industry grew 5.32 per cent (yoy) in the second quarter of 2026, higher than the first quarter of 2026, and grew 5.23 per cent (ctc) in the first half of 2026. The processing industry was the largest source of growth for the Indonesian economy in the second quarter of 2026, contributing 0.90 per cent. This business field also held the largest share of gross domestic product (GDP) at 18.50 per cent. BPS noted that the growth of the processing industry was driven by domestic and foreign demand. In more detail, the food and beverage industry grew 6.51 per cent amid rising domestic and foreign demand, especially for processed fish products, chicken meat, milk, and dairy products. Additionally, the metal goods, computers, electronic goods, optics, and electrical equipment industry grew 8.04 per cent, driven by increased foreign demand for electronic components, batteries, and electrical equipment. Meanwhile, the chemical, pharmaceutical, and traditional medicine industry grew 4.99 per cent, supported by increased domestic and foreign demand for chemical products. In the second quarter of 2026, GDP at constant prices (ADHK) was recorded at Rp3,576.2 trillion. This figure increased from Rp3,396.6 trillion in the second quarter of 2025, resulting in the Indonesian economy growing by 5.29 per cent (yoy). From the production side, besides the processing industry, trade was the next largest source of economic growth with a contribution of 0.83 per cent. This business field grew 6.39 per cent (yoy) and held a 13.02 per cent share of GDP. The construction sector was the subsequent source of economic growth with a contribution of 0.62 per cent. This sector grew 6.68 per cent (yoy) and held a 9.79 per cent share of GDP. The information and communication sector contributed 0.48 per cent to economic growth. This business field grew 6.97 per cent (yoy) with a 4.30 per cent share of GDP. From the expenditure side, the largest source of economic growth came from household consumption at 2.67 per cent, with growth of 5.06 per cent (yoy) and a contribution to GDP of 53.32 per cent. Gross fixed capital formation (PMTB) contributed 2.06 per cent to economic growth, with growth of 6.87 per cent (yoy) and a contribution to GDP of 29.36 per cent. Government consumption contributed 1.07 per cent to economic growth, with growth of 15.97 per cent (yoy) and a contribution to GDP of 7.57 per cent. Consumption by non-profit institutions serving households (LNPRT) was recorded as growing 6.93 per cent (yoy) with a contribution to GDP of 1.35 per cent. Exports grew 4.13 per cent (yoy) with a contribution to GDP of 23.13 per cent. Meanwhile, imports increased by 8.82 per cent (yoy). Given that imports are a reducing factor in GDP calculation, net exports were recorded as providing a negative contribution of 0.78 per cent to economic growth.