Factory activity across several Asian economies showed signs of weakening in March, despite a rebound in China. This slowdown was primarily due to subdued domestic demand, casting uncertainty over the region's role as a key driver of the global economy.
Notably, manufacturing activities contracted in export-driven economies such as Japan, South Korea, Taiwan, Malaysia, and Vietnam, underscoring the fragile state of these economies.
China's manufacturing purchasing managers' index (PMI), as per the Caixin/S&P Global survey, increased to 51.1 in March, marking the fastest expansion in 13 months. This improvement, alongside an official PMI survey, which indicated China's factory activity expanding for the first time in six months, provided a glimmer of relief for Beijing and global investors amidst ongoing challenges, including a lingering property crisis.
However, the sluggish performance in other Asian nations highlights the difficulties faced by policymakers in stimulating growth amid patchy global demand and uncertainty surrounding the U.S. Federal Reserve's interest rate decisions.
Despite a slight uptick in Japan's final au Jibun Bank PMI to 48.2 in March, signaling a recovery from February's contraction, ongoing challenges persist, particularly evident in declining new export orders.
Similarly, South Korea experienced a decline in manufacturing activity in March due to slowing domestic demand, despite robust overseas sales.
Meanwhile, Taiwan, Vietnam, and Malaysia also witnessed a drop in their respective PMI figures, reflecting the broader trend of weakening factory activity across the region.
Conversely, the Philippines and Indonesia saw expansion in their manufacturing sectors during March.
In January, the IMF revised its forecasts for Asia's economic growth, projecting a 4.5% expansion for the region in 2024, driven by strong U.S. demand and anticipated stimulus measures in China. However, the IMF cautioned that the recovery would vary across economies, with Japan expected to experience a slowdown to 0.9% growth, while India is forecasted to expand by 6.5%. China's economy is projected to grow by 4.6% this year, down from 5.2% in 2023.
Paraphrasing text from "Investing" all rights reserved by the original author.
