The activity choices of factories in Asia up but the Ukrainian crisis darkens the outlook

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Factories across Asia showed strong recovery in February reporting that the coronavirus had less of an impact on business, official the data showed on Tuesday.

But the Ukrainian crisis quickly emerged as new risk that could disrupt supply chains and aggravate cost pressures.

Strong international punishments against Russia in answer to his invasion of Ukraine rattled markets and drove up oil prices, adding to headaches for Asian economies and businesses already shaken by rising input costs.

“The war in Ukraine is a grand new The source of uncertainty”, Reserve Bank of Australian Governor Philip Lowe said on tuesday after son bank kept interest rates at a record moo.

While the conflict in Eastern Europe now emerges as an important risk for the global economyFebruary indicators showed conditions gradually improving before the significant escalation in crisis.

Investigations of Chinese factories, both official and private sector, showed remaining activity in expansionary territory, pointing to resilience in the world is second-most grand economy despite cost pressures.

manufacturing activity also extended in Malaysia, Vietnam and the Philippines as they gradually reopened their economies even as omicron infections continued to spread, surveys have shown.

But Japan’s industrial activity growth slowed to a five-month low in February on continued curbs on COVID-19 and rising input costs.

Expansion in activity also slow motion in Taiwan and Indonesia in a sign of the lingering impact of supply chain disruptions caused by the pandemic.

Surveys point to state fragility of from Asia recovery even before the Ukrainian crisis.

“The most immediate hit of the crisis will come from rising oil prices, which will deal a severe blow to many Asian economies,” said Toru Nishihama, chief economist at the Dai-ichi Life Research Institute. in Tokyo.

“Russia is a big exporter of gases, rare metals and other goods critical for chip manufacturing. This means that the crisis could worsen supply chain disruptions, which would be bad news for countries like Japan, South Korea and Taiwan.”

Inflation risks

The activity of Chinese factories has returned to growth in February on rising new commands, a private investigation showed on Tuesday, even if employment remained bogged down in contraction.

Separately, China official the purchasing managers’ index (PMI) for the manufacturing sector rose to 50.2 in February, remaining above the 50 mark points which separates growth of contraction. He chose up of a reading of 50.1 in January and confounded analyst estimate of a slowdown to 49.9.

Despite the pick-upla China official GPA remains good below its pre-pandemic average, said Julian Evans-Pritchard, senior Chinese economist at Capital Economics.

“The result is that China economy seems to have struggled for momentum so far year,” he said.

Japan’s PMI fell to 52.7 in February from 55.4 in January, marking the slowest expansion since September last year.

the spike in commodity prices caused by Russia invasion of Ukraine could support up inflation and complicate policies for Asian central banks, as they balance need for arrest an intruder rise in inflation and support growth.

Malaysia, for onewill wait for the third quarter before raising rates by one record low to support an unequal economy recoveryanalysts in a Reuters poll awaits.

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