In March, most of Asia’s factory activity contracted sharply. Coronavirus outbreak forced economic activities to across the globe to be stopped which resulted in sharp fall in export, power-houses Japan and South Korea overshadowing a modest improvement in China.
Purchasing Managers’ Index (PMI) survey showed on Wednesday that manufacturing gauges tumbled in Indonesia, Vietnam and the Philippines underscoring the widening damage brought by the pandemic that is responsible for infecting approximately 700,000 people, upended supply chains and led to city lockdown worldwide.
A private business survey showed, after plunging a month earlier, China’s factory activity improved more than expected in March. But the growth was marginal, highlighting the intense pressure facing
business as a domestic and export demand slumps.
Decreased virus cases allowed China to start relaxing restrictions on travel while factories in the country gradually started operations after lengthy shutdowns. As a step to curb the virus many of its trading partners imposed dramatic measures due to which activities in South Korea shrank as its fastest pace in 11 years.
“If you look at the Korean numbers, they’re fairly bad ... They’re likely to get worse still because Korea will be dependent on parts from Europe and the United States,” said Rob Carnell, Asia-Pacific chief economist at ING in Singapore.
“(Policymakers) have to accept the inevitable that there is a massive global pandemic here, there is an outbreak in almost every country globally and certainly in our region, which is getting to levels that if they don’t take very dramatic action, it’s going to get much worse,” he said.
Japan, world’s third largest economy is already in recession, country’s factory activity contracted at the fastest pace in about decade in March.
On Wednesday, a survey by the Bank of Japan “tankan” showed that business sentiment soured to a seven-year low in the three months to March due to outbreak of Coronavirus which hit the sectors from hotels to carmakers.
“The tankan clearly shows a sharp deterioration in business sentiment and confirms the economy is already in recession,” said Yasunari Ueno, chief market economist at Mizuho Securities.