Manufacturing activity surged across Asia last month as demand picked up, although plans by Japanese manufacturers for record cuts in capital spending cast doubts on the strength of a recovery in the industrialized world.
A surprise slowdown at US Midwest factories also suggested the road back to global economic health will be a rocky one, even if Asia powerhouses such as China continue to build up steam.
The world economy is finally stirring from a deep recession led by a swift turnaround in Asia, the IMF said yesterday, raising its forecast for global economic growth next year.
After a year of being downbeat about prospects for the world economy, the IMF’s latest World Economic Outlook declared the global recession is ending.
“The global economy appears to be expanding again, pulled up by the strong performance of Asian economies and stabilization or modest recovery elsewhere,” the IMF said.
The IMF said it now expects the world economy to contract by 1.1 percent this year before growing by 3.1 percent next year. This is more upbeat than its last update in July when the fund projected the world economy would shrink 1.4 percent this year, before expanding 2.5 percent next year.
Still, it cautioned the pace of a recovery is expected to be sluggish for some time and the biggest risk is if governments withdraw support measures too soon, causing growth to stall.
Highlighting that wary outlook, the Bank of Japan’s Tankan Survey showed big manufacturers plan to cut capital spending by a record 25.6 percent in the fiscal year through March 31, more than indicated in a June survey.
Capital spending typically has been a key growth driver for Japan’s economy, but is now one of its weakest links as companies cut expenditures to protect fragile profits.
A recent string of surprising weak US economic reports, meanwhile, is casting fresh doubts about a rebound in consumer demand that is vital for a strong global recovery.
Surveys on Wednesday showed activity at US factories in the nation’s heartland slowed last month while private employers cut more jobs than expected, which could weigh on confidence.
“What it comes down to is how much of this recovery is going to be sustainable. I’m not a believer yet that this is a robust economy. This is going to be a very frustratingly weak growth period,” said Robert MacIntosh, chief economist at Eaton Vance Corp in Boston.
By contrast, much of Asia continues to gather strength.
Factories ramped up production in China, Japan, South Korea, India and Australia last month with new orders picking up from buyers at home and abroad. Some Asian companies such as Japanese construction equipment maker Komatsu have reported a sharp rise in sales to China in particular as its growth jumps.
China’s manufacturing activity expanded for a seventh month last month, official data showed yesterday, largely in line with a private survey on Wednesday.
The official purchasing managers’ index (PMI) rose to 54.3 from 54 in August, the strongest reading in 17 months, the China Federation of Logistics and Purchasing said.
The report was fresh evidence that growing domestic demand in China is helping to offset weak exports, though some analysts worry the economy is still too reliant on government stimulus as the main way to generate activity.
In South Korea, the HSBC/Markit manufacturing Purchasing Managers’ Index showed activity expanding for a seventh month, though the rate of growth eased slightly to 52.7 from 53.6 in August. Separately, exports last month fell 6.6 from a year earlier, much less than expected.
In India, the HSBC Markit Purchasing Managers’ Index based on a survey of 500 companies, advanced to 55 last month from 53.2 in August, while the Australian Industry Group/PriceWaterhouseCoopers Performance of Manufacturing Index rose 0.3 points to 52.0.
LONG FLIGHT: The jets would be flown by US pilots, with Taiwanese copilots in the two-seat F-16D variant to help familiarize them with the aircraft, the source said The US is expected to fly 10 Lockheed Martin F-16C/D Block 70/72 jets to Taiwan over the coming months to fulfill a long-awaited order of 66 aircraft, a defense official said yesterday. Word that the first batch of the jets would be delivered soon was welcome news to Taiwan, which has become concerned about delays in the delivery of US arms amid rising military tensions with China. Speaking on condition of anonymity, the official said the initial tranche of the nation’s F-16s are rolling off assembly lines in the US and would be flown under their own power to Taiwan by way
OBJECTS AT SEA: Satellites with synthetic-aperture radar could aid in the detection of small Chinese boats attempting to illegally enter Taiwan, the space agency head said Taiwan aims to send the nation’s first low Earth orbit (LEO) satellite into space in 2027, while the first Formosat-8 and Formosat-9 spacecraft are to be launched in October and 2028 respectively, the National Science and Technology Council said yesterday. The council laid out its space development plan in a report reviewed by members of the legislature’s Education and Culture Committee. Six LEO satellites would be produced in the initial phase, with the first one, the B5G-1A, scheduled to be launched in 2027, the council said in the report. Regarding the second satellite, the B5G-1B, the government plans to work with private contractors
MISSION: The Indo-Pacific region is ‘the priority theater,’ where the task of deterrence extends across the entire region, including Taiwan, the US Pacific Fleet commander said The US Navy’s “mission of deterrence” in the Indo-Pacific theater applies to Taiwan, Pacific Fleet Commander Admiral Stephen Koehler told the South China Sea Conference on Tuesday. The conference, organized by the Center for Strategic and International Studies (CSIS), is an international platform for senior officials and experts from countries with security interests in the region. “The Pacific Fleet’s mission is to deter aggression across the Western Pacific, together with our allies and partners, and to prevail in combat if necessary, Koehler said in the event’s keynote speech. “That mission of deterrence applies regionwide — including the South China Sea and Taiwan,” he
‘NARWHAL’: The indigenous submarine completed its harbor acceptance test recently and is now under heavy guard as it undergoes tests in open waters, a source said The Hai Kun (海鯤), the nation’s first indigenous defense submarine, yesterday began sea trials, sailing out of the Port of Kaohsiung, a military source said. Also known as the “Narwhal,” the vessel departed from CSBC Corp, Taiwan’s (台灣國際造船) shipyard at about 8am, where it had been docked. More than 10 technicians and military personnel were on deck, with several others standing atop the sail. After recently completing its harbor acceptance test, the vessel has started a series of sea-based trials, including tests of its propulsion and navigational systems, while partially surfaced, the source said. The Hai Kun underwent tests in the port from
RSS