(Reuters) – Asian mills ended 2024 on a soft note as expectations for the new year intensified amid rising trade risks from a second Donald Trump presidency and China’s fragile economic recovery.
A series of December manufacturing purchasing managers’ indices released on Thursday showed a slowdown in factory activity in China and South Korea, although there were some signs of a pickup in Taiwan and Southeast Asia.
US President-elect Trump has vowed to impose large tariffs on imports from three major trading partners – Mexico, Canada and China – which are likely to affect other major exporting countries and broader global business activity.
The Caixin/S&P Global manufacturing PMI for China eased to 50.5 in December from 51.5 the previous month, missing analysts’ forecasts, suggesting activity picked up only modestly.
That echoed an official survey released earlier this week that showed factory activity barely rising.
Gabriel Ng, an assistant economist at Capital Economics, said Beijing’s increased policy support in late 2024 provided a near-term boost to growth, which is likely to show up in other fourth-quarter indicators.
“And this improvement should continue into early 2025,” Ng said. “But this stimulus is unlikely to last more than a few quarters, with Trump likely to carry out his tariff threat before lingering and persistent structural imbalances weigh on the economy.”
Elsewhere in Asia, South Korea’s PMI showed a decline in activity in December and a slowdown in the pace of manufacturing output, a stark contrast to the better-than-expected export growth forecast on Wednesday.
South Korea’s central bank governor said on Thursday that the pace of monetary policy easing should be flexible this year amid heightened political and economic uncertainty.
In addition to global trade uncertainty, South Korea is struggling with business confidence amid a national political crisis since President Yoon Suk-yeol’s failed bid to impose martial law last month.
Earlier in the week, Japan’s PMI showed a contraction in activity, albeit at a slower pace than in December.
India’s manufacturing activity is set to grow at its weakest pace by 2024, its PMI showed, although the South Asian economy’s factories continued to outperform regional countries, posting steady expansion over the past three-and-a-half years.
Malaysia and Vietnam also reported reductions in factory activity.
Taiwan was a rare bright spot, with activity growing at the fastest pace in five months, with PMI survey respondents reporting strong sales in Asia, Europe and North America.
And in Singapore, considered a global trade powerhouse, official data showed the city-state grew at its fastest annual rate since the pandemic in 2024, helped in part by a boost in exports before new US tariffs take effect.