‘Asia factory output falls to historic lows’

MANILA, Philippines — Manufacturing conditions in Emerging Asian countries likely deteriorated to historic lows because of the economic disturbances caused by the spread of the coronavirus disease, said London-based Capital Economics.

“Manufacturing PMIs (Purchasing Managers’ Indexes) for April are likely to have fallen to historic lows,” the macroeconomy research firm said.

Most Emerging Asia economies registered declines in manufacturing conditions in March including the Philippines, Indonesia, Myanmar, Thailand, Vietnam, Korea  and Malaysia.

Manufacturers in these economies struggled to cope with movement restrictions during lockdowns meant to curb the spread of the COVID-19 disease.

PMI gauges the health of manufacturing sectors based on indicators such as orders, output, job creation, supplier delivery times and inventories.

“March PMIs saw some of the lowest readings since the global financial crisis. The situation is likely to  get a lot worse in April,” said Capital Economics.

It noted that PMIs should have held up better in Taiwan and Korea which were able to control the spread of the virus “without the need for economically-damaging lockdowns.”

“Elsewhere, in the region, lockdowns, which include restrictions on public transport and strict social distancing rules, will have made it much harder for industrial sectors to continue as normal,” said the firm.

The slump in global demand will also weigh on industrial output as well as the still weak recovery in demand from China.

Demand will recover in the region once lockdown restrictions are lifted but recovery is expected to be slow as this will be done gradually.

“There is a risk they will be re-imposed if cases flare up again. The sharp deterioration in labour market conditions will act as a further drag on demand,” said Capital Economics.