With the exception of China, Asia’s factory activity stalled last month, as slowing global demand, stubbornly high inflation and the fallout from past interest rate hikes weighed on the region’s economies, surveys showed yesterday.
Recovering momentum in China following its exit from stringent COVID-19 policies late last year offered hopes of a more subdued downturn in the global economy.
China’s manufacturing activity expanded at the fastest pace in more than a decade last month, an official index showed, while a private sector survey also showed activity rising for the first time in seven months.
Photo: AP / Xinhua News Agency
India and Australia saw economic growth slow in the quarter ending in December, and South Korea’s exports fell last month for a fifth straight month, highlighting the pain slowing global demand was inflicting on the region’s manufacturers.
The region’s weaker data underscore the challenge Asian policymakers face in reining in inflation with higher interest rates, without choking off their economic recoveries already facing pressure from the global economic slowdown, analysts said.
“Overseas economies are showing stronger signs of slowdown” as the effect of fast-pitched interest rate hikes begin to appear in many countries, Bank of Japan (BOJ) board member Junko Nakagawa said yesterday.
China’s recovering economy, the world’s second-largest, might not be enough to offset headwinds from weak chip demand and supply constraints for export-reliant economies such as Japan.
Japan’s final au Jibun Bank purchasing managers’ index fell to 47.7 last month from January’s 48.9, dropping at the fastest pace in more than two years, a survey showed yesterday.
The weak outcome followed data showing a big drop in Japan’s factory output in January on slumping production of vehicles and semiconductor equipment, casting doubt on the BOJ’s view the economy was on course for a steady recovery.
Factory activity continued to shrink in Taiwan and Malaysia last month, and expanded at a slower pace than in January in the Philippines, surveys showed.
Separate data showed South Korea’s exports fell 7.5 percent last month from a year earlier, marking the fifth straight month of declines, partly due to a plunge in semiconductor exports.
Policymakers hope China’s reopening from COVID-19 curbs, and resilience seen so far in US and European economies, would underpin global growth this year.
The IMF last month raised this year’s global growth outlook slightly due to “surprisingly resilient” demand in the US and Europe, an easing of energy costs and the reopening of China’s economy after Beijing abandoned its strict COVID-19 restrictions.
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