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Weak Chinese demand drags Asian factory output down

By Leika Kihara

TOKYO (Reuters) – Factory activity in Asia fell sharply in June in June, a business survey showed on Monday, as subdued demand from China and developed nations gave the region The outlook for exporters is clouded.

While manufacturing activity in China expanded slightly, it contracted in Japan and South Korea as Asia’s fragile economic recovery struggled to maintain momentum.

The survey highlighted the damage done to China’s manufacturing sector. The rebound from the coronavirus lockdowns has been weaker than expected, and manufacturers in Asia are also bracing for the fallout from sharp interest rate hikes in the United States and Europe.

“The worst may be over for Asian factories, but Dai-ichi Life Research Institute chief emerging markets economist Toru Nishihama said, “As prospects for a strong recovery in China fade, Economic activity lacks momentum. “

“China is slow to implement stimulus measures and the U.S. economy may feel the pain of sharp rate hikes. These factors have made Asian manufacturers pessimistic about the outlook. “

China’s Caixin/S&P Global Manufacturing Purchasing Managers’ Index (PMI) fell back to 49 in 2019. Private survey on Monday showed that June remains above the 49 dot index marker distinguishing between growth and contraction from May70.9.

This figure, combined with Friday’s official survey showing factory activity continued to decline, is further evidence that the world’s second-largest economy lost momentum in the second quarter.

Impact Japan also felt Amid the impact, the final au Jibun Bank PMI fell to 49.8 in June, returning to contraction after expanding for the first time in seven months in May.

Japan’s PMI survey showed new orders from overseas customers fell at the fastest rate in four months in June, reflecting weak demand in China.

South Korea’s PMI fell to

.August, from May began on 47.4, extending its slump to record 49 weak demand in Asia and Europe, the first month in a row.

Factory activity also contracted in Taiwan, Vietnam and Malaysia, according to PMI surveys.

Asian economies rely heavily on the strength of the Chinese economy, which rebounded in Q1 growth, But then fell short of expectations.

The fate of Asian economies, including China, will be greatly affected. Aggressive tightening of monetary policy to curb inflation could weigh on growth in the US and Europe.

In a forecast released in May, the International Monetary Fund said it expects the Asian economy to grow this year after 70 growing 3.8% 4.6%, contributing about 70% to global growth.

But it lowered its growth forecast for Asia next year to 4.4% and warned that the outlook faces challenges Risks, such as higher-than-expected inflation and slower global demand.

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