Factory activity last month contracted sharply across most of Asia as the COVID-19 pandemic paralyzed economic activity across the globe, with sharp falls in export power houses Japan and South Korea overshadowing a modest improvement in China.
Manufacturing gauges also tumbled in Indonesia, Vietnam and the Philippines, according to various purchasing managers’ index (PMI) surveys released yesterday, underscoring the widening damage brought by the pandemic that has infected more than 873,000 people, upended supply chains and led to city lockdowns worldwide.
RISE IN CHINA
Photo: AFP
China’s Caixin/Markit manufacturing PMI rose to 50.1 from February’s record low of 40.3, and just a notch above the 50-mark that separates growth from contraction, but growth was marginal, highlighting the intense pressure facing businesses as domestic and export demand slumps.
South Korea’s IHS Markit PMI plunged to 44.2, its lowest since January 2009, as many of its trading partners imposed dramatic measures to curb the virus’ spread. The index was 48.7 in February.
Japan’s PMI fell to a seasonally adjusted 44.8 from a reading of 47.8 in February, its lowest since April 2009, adding to views that the world’s third-largest economy is likely already in recession.
CALL FOR STIMULUS
Japan’s ruling coalition has called on the government to secure a stimulus package worth at least ￥60 trillion (US$553 billion), with ￥20 trillion in direct spending.
Elsewhere in Asia, the pain was felt acutely, with the Philippines dropping to 39.7, the lowest since records began in 2016 and Vietnam slipping to 41.9, while Taiwan’s PMI rose above 50.
“Things are likely to get a lot worse in the months ahead,” Capital Economics Ltd economist Alex Holmes said in a note to clients, adding that the survey period for the PMIs likely did not capture more recent lockdowns such as those in Malaysia and Thailand.
The consultancy expects global GDP to fall by more than 3 percent this year.
Policymakers across the globe, including in Asia, have announced massive monetary and fiscal stimulus measures to try to mitigate the economic fallout from the pandemic, keep cash-starved businesses afloat and save jobs.
However, many measures have been short-gap steps to deal with the immediate damage to corporate funding and shore up banking systems amid worries of a credit crisis.
‘MASSIVE’ SPENDING
The IMF has said the pandemic was already driving the global economy into recession, calling on countries to respond with “very massive” spending to avoid bankruptcies and emerging market debt defaults.
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