Asia manufacturing rebounds as global demand weathers Trump tariff hit
Sign up now: Get ST's newsletters delivered to your inbox
While it is too early to say whether Asia’s largest exporters are adjusting to US tariffs, a pickup in global demand had given some manufacturers cause for optimism entering 2026.
PHOTO: AFP
Follow topic:
SINGAPORE – Trade bellwethers Taiwan and South Korea led a rebound in Asia’s manufacturing activity, with firms heading into 2026 with optimism that global demand is weathering US President Donald Trump’s war on free trade.
Key economies in the region expanded factory activity in December, reporting an uptick in new orders and output even as cost pressures climbed, according to S&P Global purchasing managers’ indexes (PMIs) released on Jan 2.
They followed PMIs released for China on Dec 30, 2025, which also showed an unexpected turnaround in factory activity in the world’s second-largest economy, helped by a pre-holiday surge in orders.
While it is too early to say whether Asia’s largest exporters are adjusting to US tariffs, a pickup in global demand had given some manufacturers cause for optimism entering 2026.
“Exports from most countries have surged in recent months, and we think the near-term outlook for Asia’s export-oriented manufacturing sectors remains favourable,” said Mr Shivaan Tandon, Asia economist with Capital Economics.
He noted that most Asian economies should continue to benefit from a shift in US demand away from China and strong global demand for artificial intelligence-related hardware.
Taiwan’s PMI rose to 50.9 in December from 48.8 in November, breaking above the 50-point mark that separates growth from contraction for the first time in 10 months.
“Taiwan’s manufacturing sector ended 2025 on a high, with firms signalling fresh increases in production and overall new business amid reports of firmer demand conditions,” said Ms Annabel Fiddes, economics associate director at S&P Global Market Intelligence. “There were signs that companies anticipate the recovery to continue into 2026, with manufacturers building their inventories and expressing stronger optimism around future output.”
Similarly, South Korea’s PMI rose to 50.1 from 49.4, the first expansionary reading since September.
Both economies are among the world’s largest manufacturers of semiconductors, which have benefited enormously from a booming market for artificial intelligence.
South Korea’s PMI survey showed the steepest rise in new orders since November 2024.
“According to manufacturers, new product launches and improved external demand drove the improvement in sales, while confidence in the outlook also improved markedly in December to reach its highest level since May 2022,” said Mr Usamah Bhatti, economist at S&P Global Market Intelligence. “In turn, firms were encouraged to raise both employment levels and purchasing activity.”
Elsewhere in Asia, factories mostly sustained activity growth although Indonesia and Vietnam reported slight moderations in expansion.
India’s factory sector activity slowed to its weakest growth in two years, although the pace is still among the region’s strongest.
Separately, Singapore on Jan 2 reported economic growth of 4.8 per cent for 2025
