S&P sees resilient expansion for APAC manufacturing in 2024

5G, AI, electric cars are the sector’s top growth drivers over the medium term.

Asia Pacific’s manufacturing sector has shown signs of recovery towards the end of the year and is poised to maintain a resilient growth next year, according to S&P Global Market Intelligence.

In a 18 December note, Rajiv Biswas, S&P’s chief economist for the region, attributed the rosy outlook for next year to the robust domestic demand in major economies in East Asia, coupled with India’s fast growing manufacturing industry and a recovering electronics segment.

“The medium-term outlook for the APAC manufacturing sector is also supported by a number of positive factors,” Biswas wrote.

“Continued strong expansion in domestic consumer markets in large APAC economies, notably mainland China, India and Indonesia, will be an important factor supporting further growth in intra-APAC trade in raw materials, intermediate goods and final manufactured products,” he added.

For the majority of 2023, Biswas noted that manufacturing output and exports have been weak in many APAC economies although early signs of rebound have emerged towards the end of the year.

Factory activity has generally improved with the help of rising electronics exports and strong production and exports of electric vehicles (EVs).

S&P expects the electronics industry to receive a boost from the rising adoption of 5G and other advancements like artificial intelligence (AI) in 2024 and beyond.

“Demand for industrial electronics is also expected to grow rapidly over the medium term, helped by Industry 4.0 (such as) industrial automation and the Internet of Things,” Biswas said.

The region’s car manufacturing industry is also well-positioned to ride the surging EV demand around the world.

Stronger regional trade liberalization policies will support the APAC’s rapid growth in exports and help buttress expansion in the manufacturing sector, he added.

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