The Strategist

Industrial activity in Asia is restoring

05/06/2019 - 12:50

Production activity in April increased in some parts of Asia. However, the recovery looks unsustainable, as global demand remains constrained, Reuters writes.

The Purchasing Manager’s Index (PMI) showed that manufacturing activity declined in Malaysia and Taiwan last month, slowed down in the Philippines and Indonesia, and rose in Vietnam and Thailand.

Head of the Asian studies ANZ notes, the slowdown that began in the second half of last year is stopping now.

“We still believe that in some countries further support will be very useful,” added the manager, who expects rates to be cut in Malaysia, the Philippines and Indonesia.

Production activity in India has been growing at the lowest rate in eight months. The growth of new orders and production volumes slowed against the background of elections in the country.

Last week official data showed that business activity in the manufacturing sector in China continued to grow in April, but much slower than expected. A private study also indicated a slowdown in business growth in the PRC industry.

The manufacturing sector in South Korea finished a five-month series of activity cuts due to stabilization of production and increased employment. However, the increase in activity at the beginning of the second quarter was insignificant. New orders continued to decline amid weak domestic and external demand.

The economy of South Korea showed a decline in the first quarter. The data on Wednesday showed that exports are shrinking, while the supply of memory chips fell by 13.5%.

After a projected recovery of 5.3% in 2018, East Asian economies are expected to grow at a slower pace: 5.1% in 2019 and 5% in 2020, according to a report by the Macroeconomic Research Bureau ASEAN + 3 (AMRO). The region includes China, South Korea, Japan and 10 member countries of the Association of Southeast Asian Nations.