Factories in Asia maintained their recovery in the month of February as COVID-19’s impact is lessening. However, the conflict between Russia and Ukraine might threaten the economy, agitating supply chain and cost pressures.
In the wake of Russian attack to Ukraine, global institutions have imposed sanctions on Russia, leading to a shock in Asian markets and boost in oil prices. Governor of the Reserve Bank of Australia, Philip Lowe, said on Tuesday the Ukraine’s war has brought up uncertainty.
Surveys from Chinese government and private factories declared active economy, which suggests flexibility in the vast country’s economy although cost pressures exist.
Surveys also show that in Malaysia, Vietnam and the Philippines, too, manufacturing has boosted despite Omicron spread.
However, In Taiwan and Indonesia, factory activity growth slumped due to pandemic impact on supply chain. Equally, Japan's expansion decelerated in February as restrictions on COVID-19 still linger and production costs are on the rise.
Even before the Ukraine war, Asia’s recovery had been fragile, according to the surveys.
Toru Nishihama, Chief Economist at the Economic Research Department of Dai-ichi Life Research Institute, said the first impact caused by the invasion will increase oil prices, leading to a drastic strike on Asian economy. He added the conflict might worsen supply disruptions, threatening countries such as Japan, South Korea and Taiwan, as Russia exports gas, metals, and chip-related goods.