Asia's Factories in 2024: Resilience Amid Rising Tariff Threats

The economic scene in Asia in late 2024 paints a mixed picture—growth is evident but fragile, with the shadow of renewed trade protectionism looming large. While domestic orders and output in the region’s factories provided a glimmer of resilience, export orders continued their two-year decline, signaling persistent global headwinds. Here's a breakdown:

Key Developments
Modest Expansion: The PMI for Southeast Asia hovered at 50.7 in December, barely in expansionary territory, marking the region’s annual growth at a cautious 51. Taiwan led the pack with its highest PMI reading since July (52.7), while powerhouses like South Korea and Vietnam slipped into contraction​.

China’s Sluggish Recovery: Despite ongoing stimulus measures, China’s manufacturing growth decelerated in December, showcasing the challenges of maintaining momentum in an uncertain trade environment​.

India’s Decline: India’s PMI fell to its lowest level in a year (56.4), while Singapore reported a 4.2% year-on-year manufacturing growth, hinting at a slowdown even amid relative economic stability​.

Trade Protectionism and Political Instability: With Donald Trump set to assume the U.S. presidency and his promise of hefty tariffs on imports (including those targeting China), fears of trade disruption are mounting. Meanwhile, political turmoil in South Korea—exacerbated by President Yoon Suk Yeol’s impeachment and broader crises—is dampening business confidence​.

The Domestic vs. Export Dynamic
Domestic demand kept many factories running, with new orders growing for the 10th consecutive month. However, export orders have been in freefall for over two years. This underscores a troubling disconnect—regional economies are leaning heavily on internal demand as external markets falter​.

Expert Insight
Maryam Baluch from S&P Global notes that while 2025’s output outlook remains positive, optimism has waned. Weak international demand and cautious business sentiment present significant barriers. Capital Economics’ Shivaan Tandon predicts that below-trend global growth will weigh on Asia’s export-oriented sectors for the foreseeable future​.

What’s Next?
​The resilience of Asian manufacturing hinges on two factors: domestic economies sustaining growth and global trade regaining its footing. However, with Trump’s tariff threats on the horizon, Asia’s factories may find themselves navigating yet another turbulent year.