Factory activity In Asia Weakens Amid Falling Demand
Asia's factory activity data for March suggest that weak global demand is hurting the output. Overall, the global outlook has deteriorated, which continues to put drag on Asia's economic recovery.
This weak global demand has made it difficult for policymakers to make accurate long-term forecasts about different economic measures.
South Korea And Japan's Manufacturing Activity Is Down
South Korea and Japan are export-heavy countries, but it seems their manufacturing sector also took a hit during March. Available reports suggest that manufacturing activity remains depressed in both of these countries.
In fact, the economic growth in China has also stalled, which highlights how global demand is shrinking down. On top of that, inflation and economic headwinds are also making it a very challenging environment for Asian economies.
According to one economist, global growth will remain weak during Q2 and Q3 of 2023. Based on this, the export-reliant economies of Asia will continue to experience decreased manufacturing output.
In March, the S&P Global PMI was recorded at 50.00, which is way lower than the forecasted value of 51.7. Just last month (February), the same index was standing at 51.6.
Overall, the growth has slowed in the Asian region, and the index is also showing a neutral value. A reading below 50 is an indication of contraction, while a higher reading shows economic growth.
In South Korea, the PMI for March was recorded at 47.6, which is way lower than February's value of 48.5. The face of contraction is one of the fastest in the last 6 months.
According to experts, the global inflation problem is to blame for weak manufacturing activity in Asia. Most of the Asian economies are expert-reliant, and any weakness in global consumer demand shows right away in the form of manufacturing activity data.
So once the global inflation pressure slows down to normal values, we will start to see growth in manufacturing activity once again.