Asia factory activity shrinks as US, European growth slows

Asia factory activity shrinks as US, European growth slows

A cargo ship is seen at the international cargo terminal at the port of Tokyo on January 19, 2023. PHOTO AFP TOKYO- Asia's factory activity fell in January due to the slowing of US and European growth, surveys showed on Wednesday, underscoring the fragility of the region's economic recovery.

The pace of contraction in output in Japan and South Korea was slowing with the softening of input-price pressures showing positive signs for Asia.

ALSO READ: S. Korea slides toward 1st recession in 3 years as exports dive.

The worst of Asia's downturn is behind, but the outlook is clouded by weaknesses in major export destinations like the United States and Europe, said Toru Nishihama, chief economist at Dai-ichi Life Research Institute in Tokyo.

Asian economies need a new growth engine with the recovery from COVID 19 under way. There isn't one so far. In January the PMI of Japan's au Jibun Bank stood at 48.9, unchanged from the previous month, as manufacturers felt the pain from weak global demand.

The Japan PMI survey showed that supplier delays were less prevalent than at any time since February 2021, while input and output price inflation was the slowest in 16 months.

South Korea's factory activity contracted for a seventh month in January. The decline in order in South Korea was slightly slower than a month earlier in the month, despite the fact that orders in South Korea shrank for a seventh month in January.

The South Korean manufacturing sector's immediate outlook appears to be challenging, said Usamah Bhatti, economist at S&P Global Market Intelligence.

That said firms remained confident that global economic conditions would improve and stimulate demand. ALSO READ: Japan Inc tries to lure skilled workers as inflation bites.

PMI surveys showed that factory activity increased in January in Indonesia and the Philippines, but shrank in Malaysia.

India's manufacturing industry started the year on a weaker note, expanding at the slowest pace in three months in January as output and sales growth slowed.

The International Monetary Fund raised its global growth outlook slightly slightly in the year 2023 on surprisingly resilient demand in the United States and Europe.

The IMF warned that the world could fall into recession if global growth would slow to 2.9 percent in 2023, from 3.4 percent in 2022.