(Reuters) – Asia's factory forces ended 2024 on a weak note as the outlook for the new year worsened amid rising trade risks from Donald Trump's second presidency and continued weakness in Chinese demand.
A series of December manufacturing PMIs from across the region published on Thursday showed factory activity slowing in China and South Korea although there were some signs of improvement in Taiwan and Southeast Asia.
US President-elect Trump has pledged to impose significant tariffs on imports from three major trading partners – Mexico, Canada and China – which in turn are expected to impact other large exporting countries and broader global trade activity.
The Caixin/S&P Global Manufacturing PMI for China fell to 50.5 in December from 51.5 the previous month, falling short of analysts' expectations, indicating activity grew only modestly.
This echoed an official survey released earlier this week, which showed factory activity was barely growing.
An increase in policy support for Beijing in late 2024 has provided a boost to near-term growth, which is likely to show up in other fourth-quarter indicators, said Gabriel Ng, associate economist at Capital Economics.
“This improvement should continue until early 2025,” Ng said. “But the consolidation probably won't last more than a few quarters, with Trump likely to implement his tariff threat before long, while persistent structural imbalances continue to weigh on the economy.”
Elsewhere in Asia, South Korea's PMI showed activity contracting in December and the pace of decline in output accelerating, a stark contrast to better-than-expected export growth figures released on Wednesday.
South Korea's central bank governor said Thursday that the pace of monetary policy easing should be flexible this year due to increasing political and economic uncertainty.
In addition to uncertainty in global trade, South Korea is dealing with a hit to business confidence caused by a national political crisis after a failed attempt by President Yeon Suk-yul last month to impose martial law.
Earlier in the week, Japan's PMI showed activity contracting, albeit at a slower pace in December.
Malaysia and Vietnam also reported a decline in factory activity.
Taiwan was a rare bright spot, with activity growing at the fastest pace in five months, with Purchasing Managers' Index (PMI) survey respondents reporting strong sales in Asia, Europe and North America.
In Singapore, considered a global trade leader, official data showed the city-state grew at its fastest annual pace since the pandemic in 2024, partly helped by a rush to export before expected new US tariffs take effect.
