JavaScript is off. Please enable to view full site.

Global slowdown fears darken prospects for Asian factories

Global slowdown fears darken prospects for Asian factories

Friday, July 22, 2022, 14:57 GMT+7
Global slowdown fears darken prospects for Asian factories
A man walks past Bank of Japan's headquarters in Tokyo, Japan, June 17, 2022. Photo: Reuters

Worries over a global slowdown are casting a shadow over Asia's recovery prospects with factory activity growth slowing in Japan and Australia, keeping pressure on policymakers to support their economies while tightening monetary policy to combat inflation.

Japan's manufacturing activity grew at the slowest pace in 10 months in July, the purchasing managers' index (PMI) survey showed on Friday, boding ill for an economy struggling to shake the wounds from the pandemic.

Factory activity also slowed in Australia with the index falling to 55.7 in July from 56.2 in June, a separate survey showed on Friday.

The surveys underscore the hit manufacturers are suffering from supply constraints, rising raw material costs and slowing global demand - all factors flagged by the Bank of Japan as among key risks to the country's economic recovery.

"July's PMIs suggest that the manufacturing sector is slowing as demand weakens, while the latest COVID-19 is starting to hit the services sector," Marcel Thieliant, senior Japan economist at Capital Economics, said on Japan's PMI.

"While that index never dropped as far as in other advanced economies, it is not showing the strong improvement seen elsewhere either."

PMI surveys for Britain, euro zone and the United States are due out later on Friday.

Soaring inflation, driven by Russia's war in Ukraine, has forced central banks across the globe to tighten monetary policy even at the cost of cooling their economies.

Despite suffering the economic pain from the Ukraine war, the European Central Bank raised interest rates for the first time in 11 years on Thursday as concerns about runaway inflation trumped worries about growth.

Aggressive rate hike plans by the Federal Reserve have stoked market worries over a U.S. recession. Many Asian central banks also found themselves scrambling to catch up tightening policy to tame inflation and keep their currencies from depreciating too much.

China and Japan remain exceptions by keeping monetary policy loose, a sign their economies - the second- and third-largest in the world - lack strength to offset the weaknesses in other parts of the globe.

China's economic growth slowed sharply in the second quarter, weighed by widespread COVID lockdowns and pointing to persistent pressure over coming months from a darkening global outlook. 

The slowdown in the world's second-largest economy, as well as the fallout from aggressive central bank tightening, forced the Asian Development Bank (ADB) to slash its growth forecast for the region on Thursday. 

Reuters

More

Read more

;

Photos

VIDEOS

‘Taste of Australia’ gala dinner held in Ho Chi Minh City after 2-year hiatus

Taste of Australia Gala Reception has returned to the Park Hyatt Hotel in Ho Chi Minh City's District 1 after a two-year hiatus due to the COVID-19 pandemic

Vietnamese woman gives unconditional love to hundreds of adopted children

Despite her own immense hardship, she has taken in and cared for hundreds of orphans over the past three decades.

Vietnam’s Mekong Delta celebrates spring with ‘hat boi’ performances

The art form is so popular that it attracts people from all ages in the Mekong Delta

Vietnamese youngster travels back in time with clay miniatures

Each work is a scene caught by Dung and kept in his memories through his journeys across Vietnam

Latest news