MANILA, Philippines — Despite showing signs of improvement, manufacturing conditions in Asia are expected to remain weak in the near term as threats of additional US tariffs on Chinese imports add to downside risks, think tank Oxford Economics said.
In a research brief yesterday, the UK-based firm said the purchasing managers’ indices (PMI) in Asia registered slow expansion in July, especially in the region’s top exporting economies.
The headline PMI for Asia rose to 49.5 in July from 48.9 in June, primarily due to the improvement in the Northeast Asia PMI which rose to 48.7 in July from 47.9 in June.
The PMI for ASEAN remained steady at 49.5 in July.
The Caixin China PMI returned to the 50 threshold in July, after falling to 49.4 in June, indicating stable manufacturing conditions.
“Despite the slight improvement in the aggregate indices, momentum remained weak (as indicated by the three-month moving average), supporting our view that exports and manufacturing are likely to remain under pressure in the near term,” said Oxford Economics.
“The ongoing trade tensions between the US and China indicate that activity is unlikely to pick up meaningfully any time soon. The unexpected announcement of further US tariffs on Chinese imports threatens to derail the trade truce. We expect this step to make China less keen to achieve a deal and more determined to prepare itself for long-term economic tension with the US,” it added.
US President Donald Trump recently threatened to impose an additional 10 percent tariff on $300 billion worth of imports from China.
Last week, Finance Secretary Carlos Dominguez warned that the intensifying trade war between the US and China could worsen the economic headwinds faced by the Philippines.
He said the effect of this development to the country would be discussed in the next meeting of the the Economic Development Cluster (EDC).
The new tariffs are likely to affect some of the country’s exports to China, but Dominguez noted that the effect is not significant as the economy is not dependent on exports.