[ad_1]
By Marius Zaharia
HONGKONG (Reuters) – Industrial activity has contracted in most Asian countries last month following the intensification of the trade war between Washington and Beijing, which caused fears of a slowdown in the economy. 39 global economy and encouraged policymakers in the region and beyond to step up their recovery.
These growth indicators are expected to deteriorate further in the coming months as trade rates rise and global trade declines and business and consumer confidence declines, resulting in job losses. and delays in investment decisions.
Some economists predict a global recession and a further decline in interest rates if trade tensions do not abate at the Group of 20 summit held in Osaka (Japan) in late June , when Presidents Donald Trump and Xi Jinping could meet.
In China, the Purchasing Managers Index in the manufacturing sector, consisting of Caixin / Markit (PMI) had a modest expansion to 50.2, providing investors with short-term relief after the release of an official gauge on Friday.
The outlook, however, remained gloomy, as output growth slowed, factory prices stagnated, and companies were less optimistic about production since the start of the series of surveys in April 2012.
PMIThey were below the 50-point mark between the contraction of expansion in Japan, South Korea, Malaysia and Taiwan, below expectations in Vietnam and slightly improving in the Philippines.
"The additional shock caused by the escalating trade tensions will not be beneficial for global trade and if demand in the US, China and Europe continues to moderate, which is very likely, it bodes badly for Asia as a whole, "said Aidan. Yao, senior economist of emerging markets in AXA Investment Managers.
"As for the response of monetary policy, the race will be almost everywhere down."
Australian and Indian central banks are expected to lower their rates this week, and others around the world are expected to do the same in the coming weeks and months. HSBC economist Jingyang Chen said that the PMI The figures could mean "Beijing will double on the easing of the private enterprise sector".
Eurozone activity is also expected to contract, while US manufacturing is expected to grow steadily, although economists expect the global malaise to affect the US economy. Federal rate futures are now almost fully reducing rates by September, with a 50% chance that rates will change between July 30th and July 31st.
JP Morgan expects the Federal Reserve to cut rates twice this year, which is a major shift from previous expectations that rates would remain unchanged until the end of 2020.
India, one of the world leaders in terms of growth, will publish PMI data later on Monday. On Friday, the data showed that the economy was experiencing the weakest growth in more than four years in January-March.
Expansion in the Philippines reflects strong domestic demand and less reliance on trade, while for Vietnam, it reflects a diversion of business flows and trade flows due to tariffs.
Societe Generale badysis shows that in the industries affected by the tariffs put in place – such as capital goods and some electronic products – Germany, Mexico, South Korea and Taiwan have each gained more business in the USA.
Vietnam has been the main beneficiary of industries where tariffs are a threat, such as smartphones, and is also seeing investments from companies that are relocating their production out of China.
"The countries of Southeast Asia, especially Vietnam and Thailand, are often cited as the first choice and seem ready," said a Société Générale badyst in a note released Friday.
South Korean exports – seen as an indicator of global growth – fell 9.4% in May, which is worse than a median forecast of a 5.6% decline, revealed published data on Saturday.
RECESSIONFEARS
The trade dispute between China and the United States has suddenly intensified last month when Trump increased tariffs on hundreds of billions of Chinese imports from 10% to 25%, and threatened to levy taxes on all Chinese products.
If that happens, and China reacts, "we could end up in a (global) three-quarter recession," said Chetan Ahya, Morgan Stanley's director of the global economy.
Washington's new tariff threats against Mexico last week also contributed to fears of a global recession, with stock markets tumbling around the world. The 10-year US Treasury yield fell to 2.121%, a nadir last observed in September 2017.[MKTS/GLOB]
Over the weekend, tensions between China and the United States have resumed over trade, technology and security.
Chinese Defense Minister Wei Fenghe warned the United States not to interfere in security disputes over Taiwan and the South China Sea.
On Friday, China also threatened to unveil an unprecedented list of "unreliable" foreign companies, groups and individuals that undermine the interests of Chinese companies. This is what happened after Washington placed last month Huawei on a blacklist that effectively prevents US companies from dealing with the Chinese giant telecommunications equipment.
"We take this seriously. This means that the trade war has not only become a technology war, but also a large-scale commercial war. China will multiply retaliatory measures, especially in the technology sector, "said Iris Pang, economist for Greater China to ING, added that tensions over Taiwan were a source of concern rather than an urgent concern.
(Report by Marius Zaharia: edited by Simon Cameron-Moore)
Source link
