Mustaqim Adamrah, Jakarta – The second quarter of this year saw the manufacturing sector grow at its slowest rate since the start of the crisis, regardless of the increase in domestic spending spurred by the general elections.

Out of eight specific product categories monitored by the Central Statistics Agency (BPS), the wood- and forestry-based products suffered the most, with the value of output contracting by 3 percent in three months, prolonging an earlier 3.6 percent slump in the first quarter.

Its sister product category, paper and printed goods, also grew at a snail's pace, by 1.4 percent as opposed to the 10 percent growth recorded in the first quarter.

Among the product categories that saw a steady although minimal acceleration, was base metal iron and steel, with growth inching slightly higher to 3.2 percent after registering a 2.9 percent growth in the first half year. The food and beverages category also grew, 1.42 percent higher than in the first quarter.

With the ninth product category – other types of manufacturing products – contracting by 7 percent in the second quarter, the total output of the manufacturing sector grew by 1.85 percent to Rp 327.7 trillion (US$33.1 billion), relative to the total value in the first quarter.

Assuming the slump in global demand for Indonesian manufacturing products is already bottoming up, the industry ministry expects the third quarter to witness an accelerated growth albeit modest.

"The third quarter of this year is expected to see industrial growth of 2.2 percent," Industry Ministry secretary-general Agus Tjahjana told reporters on Thursday.

He said three industries would support the 2.2 percent growth forecast in the next quarter, namely the food, beverage and tobacco industry, the fertilizer, chemistry and rubber-made goods industry and the transportation, machinery and tools industry. The three categories control, on average, 69 percent of the total output value each year.

Another growth contributing factor in the third half year will be the fasting month of Ramadhan, which is renowned for causing increases in domestic demand for various types of products, beginning Aug. 22 and ending July 22.

"On the external side, the unemployment rate in the United States, which has already begun to recover, will also boost national exports to that country," Agus said.

To boost growth, the ministry also plans to accelerate its budget spending. The government has so far only spent 40 percent of the Rp 1.7 trillion allocated in its 2009 state budget as of July. "We will see higher spending in September as we begin to disburse funding for the machinery revitalization program," he said.

Manufacturing industry quarterly growth (in percentage)

Source: The Central Statistics Agency (BPS) processed by the Industry Ministry