Asia's factory activity contracts despite China's reopening

TOKYO Asia's factory activity contracted in January as the boost from China's reopening had yet to offset headwinds from slowing US and European growth, surveys showed on Wednesday, underscoring the fragility of the region's economic recovery.

China's factory activity shrank more slowly in January after Beijing lifted tough Covid-19 curbs in late 2022, a private sector survey showed.

Softening input price pressures also offered initial positive signs for Asia, with the pace of contraction in output slowing in Japan and South Korea, the surveys showed.

But there is uncertainty about whether Asia can weather the hit from slowing global demand and stubbornly high inflation, some analysts say.

"The worst of Asia's downturn is behind, but the outlook is clouded by weaknesses in major export destinations like the United States and Europe," said Dai-ichi Life Research Institute chief economist Toru Nishihama.