ASEAN Manufacturing Outlook Remains Cloudy in 2023 as Global Demand Slows

Private survey showed that manufacturers in Southeast Asia, known as ASEAN, continued to face a downturn at the end of 2022, with December’s PMI data indicating the softest output expansion in 15 months, driven by a faster drop in new orders as global demand slowed.

The latest S&P Global ASEAN Manufacturing PMI posted 50.3 in December 2022, down from 50.7 in November. This marked the slowest expansion of the ASEAN manufacturing sector in the current 15-month growth sequence.

However, the reading suggested that the ASEAN region was the only region to see growth in manufacturing production in December, while goods producers in major developed countries like Japan, China, the United States, and the eurozone suffered from decreased demand, which was fueled by higher costs and a broad downturn in economic conditions.

S&P Global stated that the overall trend for ASEAN factory output remained one of declining growth, and a sharp drop in new orders in December does not bode well for the sector picture going into 2023. Lack of demand was also cited as a major issue for many Asian economies towards the end of 2022.

With the weakening of demand for manufactured products, one unsurprising outcome has been the easing of price pressures, which continued in December 2022, according to S&P Global.

According to S&P Global, the outlook for ASEAN manufacturing would remain weak into 2023. Amidst these numerous worries, business confidence is likely to hit a 16-month low, foreshadowing a potentially turbulent ride this year. Singapore, which has been at the forefront of the regional production sector for the past few months, had its Manufacturing Purchasing Managers’ Index for December fall below the neutral 50.0 threshold, indicating rough seas ahead for the ASEAN region in 2023.