Reports showed that Asia's factories experienced substantial slumps in global trade due to the pandemic. Exports from Japan and South Korea suffered the most. They marked the downfall as their lowest in a decade.
Last Monday, a series of manufacturing surveys suggested that the factory business in Asia would not rebound anytime soon despite the improvement in China's factory activity in May.
According to China's Caixin/Markit Manufacturing Purchasing Managers' Index, it reached 50.7 in May, its highest reading since the start of the year. The improvement was due to lockdown easements that allowed companies to clear outstanding orders and resume operations. However, several of China's trading partners are still restricted.
A private business survey showed that new export orders continue to experience contractions. Last Sunday, China's official PMI survey manifested a slight economic recovery but remained fragile.
In Japan, factory activity declined at its fastest pace since May 2009. A separate private-sector survey also showed that South Korea's manufacturing decline experienced the same sharp speed in fall. Similarly, Capital Economics claimed that the region's manufacturing sector is currently undergoing a deep recession.
The company wrote that the industry may have seen an initial jump during the lockdown restrictions, and business activity continues to improve gradually in the next months. It was shown that external demand started to recover, but output capacity is still below typical levels for months. It was also revealed that the domestic and global market remains low.
Last May, Taiwan's manufacturing activity also fell, while the Philippines and Malaysia saw a rebound on their PMIs last April. Market players still remain reluctant about the improvement since the indexes were always short of the 50-mark threshold. The said threshold is a distinctiveness of expansion from contraction.
Since the declines, South Korea has been extending its export output for the first quarter consistently. India's factory activity, on the other hand, sharply contracted in May. The result showed that it was India's second-month decline caused by governmentally-imposed lockdowns. The said restrictions also caused a decrease in demand for manufacturing products.
At present, several countries have opted to ease lockdown restrictions. Equity markets have started to rally and are optimistic about a swift return to stability in specific industries. The recovery, however, was perceived to take longer.
According to the International Monetary Fund in May, the global economy would recover longer because of economic shock. It has even downgraded its current projection for a three percent contraction for 2020.
