Asian Manufacturing is Gaining Steam
For many Asian countries, 2013 has had a good start. Recent data indicate that their economic growth is starting to pick up, and the improvement in manufacturing is especially noteworthy.
According to recent surveys from HSBC, the December Purchasing Manager’s Index (PMI) in both South Korea and Taiwan moved into expansion zone for the first time since last May, probably reflecting that the robust domestic consumption in the region helps mend the electronics manufacturing cycle when the demand from industrial countries remains sluggish. Meanwhile, the PMI readings in China, India, and Indonesia continued to stay above 50, signaling further improvement in the health of their manufacturing sectors.
Singapore, which relies heavily on intra-Asian trade and is often considered a bellwether for the region, gained support from stronger exports in the last quarter of 2012 and reported 1.1 percent growth in real GDP, compared with a flat reading during the preceding three-month period.
These signs of strength in Asian economies are not surprising considering that many risks to global economic growth in 2012—fears of a hard landing in China, a eurozone collapse, and a U.S. economy slipping back into recession—appear to be mitigating recently even though the downside risks still remain. MAPI forecasts that industrial production in East Asia will accelerate from 5.7% in 2012 to around 8% in 2013 and 2014. For Southeast Asia, the growth will increase from 4.2% in 2012 to around 6% in the next two years.