Global Economic Outlook

Before the start of the war in Ukraine, monthly global economic activity indicators for the manufacturing and service sectors had continued to show expansion, although there were signs of slowing manufacturing growth and negative effects on activity due to Covid-19 outbreaks, especially in China. The global composite PMI index edged down to 52.7 in March, but still signalled growth, as the index has now done for almost two years. The decline in the index for manufacturing in the month was more pronounced than that for services and export business noted the fastest decline in the index since July 2020. In China, the increase in Covid-19 cases and renewed lockdowns contributed to a sharp drop in the services PMI in March, which fell from 50.2 to 40, the steepest fall since the start of the pandemic. The manufacturing PMI also fell, but not as sharply, from 50.4 to 48.1. The pandemic has created difficulties in shipping items but falling export orders and market uncertainties over the war in Ukraine were also cited as factors worsening business conditions. The wider ASEAN manufacturing PMI reached a 6-month low in March, although the reading is still consistent with robust growth in the first quarter.