Weak Asian factories take shine off China’s rebound By Reuters

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It’s Leika Kihara

TOKYO (Reuters) – Industrial activity in most Asian countries weakened in March although it rebounded in China as domestic demand picked up, a survey showed on Monday, undermining hopes for faster growth, driving the global economy.

Exporters Japan and South Korea saw manufacturing activity shrink, as did Taiwan, Malaysia and Vietnam in a sign of the region’s economic slowdown.

Caixin/S&P Global China’s purchasing managers’ index (PMI) rose to 51.1 in March from 50.9 last month, a separate survey showed on Monday, growing at the fastest pace in 13 months and business confidence hitting an 11-month high.

The findings are in line with an official PMI survey released on Sunday that showed China’s factory activity expanded for the first time in six months.

The recovery in China, which is struggling to rebuild its economy after a prolonged financial crisis, is providing relief to Beijing and investors around the world.

However, the weakness in other parts of Asia highlights the challenges policymakers in the region are facing as they grapple with rising risk signals around the world and uncertainty over when the US Federal Reserve will start cutting interest rates.

“China’s exports are picking up a bit but that’s because their goods are cheaper. This means that other Asian countries have to compete with China because of the demand that is not growing,” said Toru Nishihama, who is the chief economist at Dai-ichi. Life Research Institute.

“Without a clear driver of global growth, it is difficult to explain the positive outlook for Asia,” he added.

Japan’s final Au Jibun Bank PMI stood at 48.2 in March, the highest level since November and a recovery from February’s 47.2 which marked the fastest pace in over 3-1/2 years.

But the trend marked the 10th straight month in which new shipments fell, reflecting a bleak outlook in major markets such as China and North America, the survey showed.

Manufacturing activity in South Korea also slowed in March as weak domestic demand dampened strong exports and the PMI fell to 49.8 in March from 50.7 in February.

Taiwan’s PMI fell to 49.3 in March from 48.6 in February, while Vietnam fell to 49.9 from 50.4, and Malaysia fell to 48.4 from 49.5, the survey showed.

In contrast, manufacturing activity expanded in March in the Philippines and Indonesia, the survey showed.

In an updated forecast in January, the IMF confirmed that Asia’s economy will grow by 4.5% this year, led by strong US demand and an increase in expected stimulus measures in China.

But it said the recovery will be different in Japan’s economy, which is expected to see growth slow to 0.9%, in contrast to India’s expected 6.5% growth. The IMF expects China’s economy to grow 4.6% this year, down from 5.2% in 2023.

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