‘Asia Pacific manufacturing up for expansion this year’

MANILA, Philippines — The manufacturing sector in the Asia Pacific region is expected to show robust expansion in 2021 as most economies have eased lockdown restrictions and COVID-19 cases have stabilized.

In a new research report, London-based market intelligence firm IHS Markit said the combined impact of a recovery in domestic demand across AsPac economies and strong export growth to major global markets outside the region would drive the expansion in manufacturing production.

The outlook for manufacturing production this year is underpinned by the rapid expansion forecast for world economic growth at around five percent.

In AsPac, growth is expected to be at a higher rate of 5.8 percent.

“With rapid GDP (gross domestic product) growth forecast for China, India and ASEAN, many sectors of Asian manufacturing are expected to lead the near-term economic recovery,” IHS Markit AsPac chief economist Rajiv Biswas said.

“In the ASEAN region, manufacturing output has also shown a substantial rebound in recent months, helped by an upturn in exports as well as improving domestic demand,” he said.

Last month, the Philippine manufacturing sector returned to growth territory supported by recovery in domestic demand.

The headline Philippine Purchasing Managers’ Index rose from 49.2 in December to 52.5 in January, the highest reading in 25 months and firmly above the neutral 50 mark that separates expansion from contraction.

IHS Markit said the electronics sector, which accounts for a significant share of manufacturing production and exports for many East Asian economies, is already showing buoyant growth as the pandemic continues to drive rapid growth in demand for products such as laptops, while global 5G rollout is also boosting demand for new smartphones.

“The Asian auto sector, which suffered a severe slump in production in the first half of 2020 due to widespread global lockdowns, has also shown a substantial upturn in recent months as consumer demand recovers,” Biswas said.

“Due to the pandemic, the pharmaceuticals and medical equipment sector has also performed strongly in many Asian economies. Other sectors that are also showing expansion include household and personal use products, machinery and equipment as well as chemicals,” he said.