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Coronavirus outbreak devastated Asian factory output in February

By Ramla Soni

Chinese slowdown hampers activity throughout the continent

Asia’s factories saw steep declines in activity in February as a result of the coronavirus outbreak.

Chinese factory activity suffered its sharpest contraction on record in February, according to the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI). While thousands have been infected, millions more have had to cope with strict travel restrictions and public health measures.

The Chinese government’s official PMI figures, published this weekend, showed a similar record pace of decline.

The grinding to a halt of the world’s second largest economy was a severe blow to factories across Asia.

Japan’s PMI showed its factory activity was hit by the sharpest contraction in nearly four years last month, reinforcing expectations the economy may have slipped into recession.

South Korea’s factory activity also shrank faster in February, as export orders contracted at the quickest pace in over six years in a shattering blow to production.

Activity in Vietnam and Taiwan contracted following growth in January.

Among Asian economies less reliant on global trade, growth in India’s factory sector eased slightly from a near eight-year high in January, while Indonesia’s factory sector returned to growth.

Fears the virus would wreak havoc on the global economy sent financial markets into a tailspin last week and raised expectations of coordinated monetary policy action by central banks to mitigate the fallout. Trillions of dollars were wiped off equity markets, with world shares posting their biggest weekly decline since the depths of the 2008 financial crisis.

Investors are now waiting for PMI readings out of major euro zone economies which are also expected to point to declining activity.

FURTHER READING: Financial markets in Europe and the US kept afloat amidst coronavirus drug hopes

FURTHER READING: Chinese manufacturing expands despite coronavirus

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