Shortages, shipping costs and closures prevent Asian economies from regaining momentum lost in early 2000

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Shortages of electricity, computer chips and other parts; soaring shipping costs; and factory closures to fight the pandemic are wreaking havoc in Asian economies.

As the business climate improves in parts of Asia as governments begin to ease restrictions put in place to tackle coronavirus infections, there is growing evidence that such disruptions are slowing the return. business as usual.

A quarterly Bank of Japan survey released on Friday showed manufacturers sentiment to be at its highest level in nearly three years. The survey found that companies were planning to increase their investments more than expected, but component shortages were disrupting production.

This was in line with data released Thursday which showed output at Japanese factories fell 3.2% in August from the previous month. This follows a 1.5% drop in July.

Auto makers and manufacturers of computer products and other electrical machinery have been hit the hardest.

The Japanese company Suzuki Motor Corp. 7269,
-0.17%
became the latest automaker to idle its production lines for a few extra days due to component shortages. Suzuki said in a statement that it plans to suspend operations at one factory in central Japan for three more days and do the same two days at another factory.

Although there are signs of improvement in parts of Asia, “further peaks of new daily cases in some countries and relatively slow progress in the roll-out of vaccination in Southeast Asia means that the risks Shortages of semiconductors and other components could persist for an extended period, ”Harumi Taguchi of IHS Markit said in a comment.

Japan’s retail sales fell 4.1% much worse than expected in August from the previous month on weak demand for clothing and appliances.

Another sign of slowing activity, surveys of factory managers also showed a slowdown in Chinese manufacturing.

The Manufacturing Purchasing Managers Index, or PMI, fell to 49.6 in September from 50.1 in August on a scale of 0 to 100, where 50 marks the break between expansion and contraction.

The investigation was carried out before power shortages began to cause factories in parts of China to shut down.

The lowest readings were in energy-intensive areas such as chemicals and metals, Capital Economics’ Julian Evans-Pritchard said in a report. “Survey respondents noted that material shortages and transportation delays always hampered production,” he said.

The growing demand for computers and other equipment for remote working has strained the supply of the microchips that run them.

Shortages of shipping containers and occasional port closures due to COVID-19 outbreaks have also caused bottlenecks in global supply chains.

Chinese and Southeast Asian ports “are still suffering the consequences of these earlier closures, with record queues of ships awaiting unloading,” Rabobank said in a report on the shipping industry.

He estimated that 10% of the world’s container capacity was waiting offshore for unloading.


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