Asia’s manufacturing powerhouses faced a tough battle to rebound from decline in February, with Japan feeling the squeeze from a sharper drop in demand while China’s recovery remained uneven, overshadowing glimpses of progress in other parts of the region.
Several business surveys released on Friday painted a picture of mixed performance across Asia, with Japan’s manufacturing purchasing managers’ index (PMI) revealing factory activity plunging at its fastest rate in over three years.
The outlook in Japan appeared grim, with depressed demand both domestically and internationally weighing heavily on the manufacturing sector. Usamah Bhatti at S&P Global Market Intelligence remarked, “February PMI data indicated another month of deteriorating operating conditions in the Japanese manufacturing sector.”
This trend spells trouble for Japan’s economy, which unexpectedly slipped into recession in the fourth quarter of last year, losing its status as the world’s third-largest economy. The situation is further complicated for the Bank of Japan as it navigates the exit from ultra-easy monetary policy.
Meanwhile, China’s economic performance displayed inconsistency, with the government’s official PMI signaling ongoing factory activity decline, contrasting with a modest uptick seen in the private-sector Caixin PMI. All eyes are on China’s upcoming annual parliamentary meeting, where policymakers face mounting pressure to steer the economy back on track.
In Taiwan, another semiconductor stronghold, the pace of activity decelerated, reflecting broader regional challenges. However, South Korea bucked the trend, with export growth surpassing expectations for the fifth consecutive month, driven by robust demand for semiconductors.
While parts of Southeast Asia showed signs of growth, with PMIs in Vietnam, Indonesia, and the Philippines indicating expansion, Malaysia and Thailand continued to grapple with declining activity.
As Asia’s major economies navigate the uncertainties of the global landscape, the road to recovery remains arduous, with each nation facing its unique set of challenges amid the evolving economic landscape.
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