Industrial activity in Asia stagnated in February, with the exception of China, as slowing global demand, stubbornly high inflation and the fallout from past interest rate hikes weighed on economies across the region. region, according to surveys released Wednesday.
The resumption of activity in China, following the abandonment of strict COVID-19 policies at the end of last year, raised hopes for a more moderate slowdown in the global economy, as the Federal Reserve US maintains its trajectory of higher long-term interest rates.
China’s manufacturing activity grew at the fastest pace in more than a decade in February, an official index showed, while a private sector survey also showed activity rose for the first time in seven months .
India and Australia saw economic growth slow in the quarter ending December, and South Korea’s exports fell in February for the fifth consecutive month, underscoring the pain that slowing global demand is inflicting. to manufacturers in the region.
The weaker data from the region underscores the challenge Asian policymakers face in containing inflation with higher interest rates, without stifling their economic recoveries already facing pressure from the global economic slowdown, analysts said.
“Overseas economies are showing stronger signs of a slowdown” as the effect of rapid interest rate hikes begins to show in many countries, board member Junko Nakagawa said on Wednesday. the Bank of Japan (BOJ).
The recovery of China’s economy, the world’s second largest, may not be enough to offset headwinds from weak chip demand and supply constraints for export-dependent economies like Japan.
The final PMI at Japan’s Jibun Bank fell to 47.7 in February from 48.9 in January, the fastest decline in more than two years, according to a survey released Wednesday.
The weak result comes on the heels of data showing a sharp decline in industrial production in Japan in January, due to the slump in production of cars and semiconductor equipment, calling the BOJ’s view into question. that the economy is on the path to a steady recovery.
Factory activity continued to contract in Taiwan and Malaysia in February, and grew at a slower pace than in January in the Philippines, surveys showed.
Separate data showed South Korea’s exports fell 7.5 percent in February from a year earlier, marking the fifth consecutive month of decline, partly due to a slump in exports of semi -drivers.
Policymakers hope China’s reopening to COVID-19 restrictions, and the resilience seen so far in the US and European economies, will support global growth this year.
Last month, the International Monetary Fund slightly raised its outlook for global growth in 2023 on the back of “surprisingly resilient” demand in the United States and Europe, easing energy costs and the reopening of the economy. Chinese economy following Beijing dropped its strict COVID restrictions.
