Developing Asia's factories may have experienced the most severe impact of the manufacturing downturn.

• Since June 2022, South Korea's S&P manufacturing PMI has shown an expansionary reading.
• Improvements were observed in January compared to December for Vietnam, Indonesia, ASEAN, Taiwan, Malaysia, and Thailand.

Private surveys released Thursday suggest that most developing economies in Asia may have overcome the worst of the manufacturing slowdown by 2023.

In January, South Korea's S&P manufacturing purchasing managers' index showed an expansionary reading of 51.2, up from 49.9 in December, marking the first such reading since June 2022.

At the beginning of 2024, the South Korean manufacturing sector experienced a renewed improvement in its health, as output, new orders, and exports all returned to growth, with a sharper expansion in purchasing, according to Usamah Bhatti, an economist at S&P Global Market Intelligence, who made the statement in a release on Thursday.

Bhatti stated that the strongest upward contribution to growth came from an expansion in new orders, despite the increase being modest and the first since June 2022. The growth was reportedly reflective of increased domestic and international orders, particularly for new products.

In January, Vietnam's survey reading was 50.3, up from 48.9 in December, while Indonesia's reading stood at 52.9, down from 52.2 in December. Despite this, the overall print for ASEAN economies remained at 50.3 in January, marking the first time it has surpassed 50 in five months.

These private PMI surveys are commonly viewed as one of several key indicators of economic activity in the respective economies.

Possible turnaround?

The International Monetary Fund has revised its forecast for emerging economies in Asia, predicting a 5.2% growth rate for 2021, a 0.4 percentage point increase from its previous forecast. Additionally, the IMF has upgraded its global economic growth projection for 2024 to 3.1%, citing the resilience of the U.S. and several large developing economies, as well as fiscal support in China.

Despite being below 50 readings, Malaysia recorded its best reading in 17 months with a 49. Taiwan and Thailand also experienced improvements in January compared to December's print.

According to Annabel Fiddes, economics associate director at S&P Global Market Intelligence, the latest PMI survey data indicates that the worst of Taiwan's manufacturing downturn is now over, with the headline index moving closer to the neutral 50.0 level.

Nearly a year ago, companies reported the slowest decline in production and new work, but business confidence increased as there were expectations that 2024 would bring a strong recovery in customer demand.

Asia giants

Despite some positive signs for China, Asia's largest economy, the gap between official and private PMI surveys suggests an uneven terrain.

In January, the Caixin China PMI was 50.8, as reported on Thursday, due to the first increase in new export orders in seven months, which helped boost the index to the same level as December.

The National Bureau of Statistics of China released data on Wednesday showing that the country's official manufacturing PMI stood at 49.2 in January, marking the fourth consecutive monthly contraction, compared to 49 in December.