According to data released on the website of the China Federation of Logistics and Purchasing on May 6, the global manufacturing PMI ended a brief rebound in April, which dropped 8.3 percentage points from the previous month to 39.5%, and remained below 50% for three consecutive months.
On the whole, the global manufacturing industry accelerated to decline in April, the impact of the new coronary pneumonia epidemic on the world economy has intensified, and the economies of major countries in the world have all declined significantly. The International Monetary Fund recently said that the global economy has almost certainly entered a recession, the severity of which is second only to the Great Depression, and the world economy will continue to experience negative growth in the second quarter.
Various countries have introduced many policies to prevent epidemic situation, protect people's livelihood, and stabilize the economy, which will alleviate the pressure of rapid economic decline to a certain extent. The rapid development of the epidemic situation in some countries has been contained, and an economic restart is under preparation. Restraining the spread of the epidemic as soon as possible, mitigating its impact on the economy, and recovering losses to the greatest extent are challenges faced by all countries in the world. It is also necessary to achieve coordinated development of the global supply chain through cooperation between countries and continue to promote economic globalization to truly achieve it.
In terms of regions, the following characteristics are presented:
1. European manufacturing industry continues to deteriorate and PMI declines to expand
In April, the European manufacturing PMI fell 11.4 percentage points from the previous month to 33.6%, again hitting a record low. The manufacturing PMIs of Germany, France, the United Kingdom and Italy all fell below 40%. Index changes show that European manufacturing activity continued to decline significantly from last month. In order to prevent and control the epidemic situation, various countries have adopted different levels of blockade measures, which objectively caused a short pause in the manufacturing industry chain, which has a greater impact on economic operation. The risk of the European economy falling into recession has greatly increased. According to the latest forecast of the International Monetary Fund, the European economy will contract sharply in 2020, of which the GDP of the euro zone will contract by 7.5%.
In response to the impact of the epidemic, governments of various countries have issued a series of stimulus measures to boost domestic demand and protect business operations. The EU member states have agreed to set up a large-scale "recovery fund" to deal with the economic impact of the epidemic, and recently signed an emergency rescue plan totaling 540 billion euros. The European Central Bank also plans to continue to resist the economic impact of the epidemic by expanding the scale of asset purchase plans and adjusting asset composition in monetary policy. Europe will enter a period in which epidemic prevention and control and economic recovery are advancing in parallel. Although it is still difficult for the European economy to improve significantly in the second quarter, the room for continued decline has also narrowed.
2. The growth rate of the American manufacturing industry continued to decline, and the PMI fell significantly
In April, the PMI of the manufacturing industry in the Americas fell by 9 percentage points from the previous month to 39.7%, running below 50% for two consecutive months, and the decline was significantly expanded from the previous month. The manufacturing PMI of major countries dropped significantly from the previous month. Manufacturing PMIs in Canada, Brazil, and Mexico all fell below 40%, while U.S. manufacturing PMIs also fell to a low level of around 41%.
Comprehensive index changes, the impact of New Coronary Pneumonia on the American economy is also relatively serious. Changes in the US economy and the control of the epidemic will affect the overall development of the American economy. The ISM report shows that the U.S. manufacturing PMI fell to 41.5% in April from 49.1% in March, the lowest level since April 2009. The sub-index shows that both supply and demand and employment in the US manufacturing industry have been greatly affected, and the index has dropped to below 30%. Affected by the impact of the epidemic, the growth rate of US GDP fell by 4.8% in the first quarter. The change in manufacturing PMI in April means that the US economy will continue to decline in the second quarter. The Fed chairman made clear that the US economy may experience an unprecedented decline in the second quarter, and the Fed is committed to supporting the economic recovery.
In response to the impact of the epidemic, the United States has successively issued many stimulus policies. First, apply unrestricted monetary policy, and recently began to use fiscal policy, focusing on protecting SMEs and increasing support for epidemic prevention and control supplies. The US government and social economists disagree on the future economic development of the United States. No matter how the economy evolves, controlling the epidemic as soon as possible should be the most important issue for the United States at present.
3. African manufacturing industry declines and the index decline increases
In April, the African manufacturing PMI fell by 6.5 percentage points from the previous month to 40.9%, which was a month-on-month decline for four consecutive months, and the decline was greater than the previous month. The manufacturing PMI of major countries has declined to varying degrees. Although the impact of the New Coronary Pneumonia Epidemic on Africa is not as severe as in Europe and the United States, the African economy has also experienced a significant decline. Many African countries lowered their economic growth forecasts for 2020. The impact of the epidemic on Africa has the potential to expand further. According to the UN report, the African continent may become the next severely affected area. Affected by the epidemic, the start of free trade on the African continent was postponed to January 2021.
The international community pays close attention to the development of the African epidemic. In addition to providing necessary medical assistance, the relief of huge extra debts of poor African countries is an important measure taken by the international community to alleviate the impact of the epidemic on African economic development. The major countries in the African region have also responded to the economic impact of the epidemic by means of interest rate cuts, tax cuts, and special credit.
4. Manufacturing in Asia has declined, and the PMI decline is relatively small
In April, the Asian manufacturing PMI fell 5 percentage points from the previous month to 43.8%, indicating that under the influence of the epidemic, Asian manufacturing continued to decline. However, from the perspective of index levels and month-on-month declines, manufacturing in Asia is relatively better than manufacturing in Europe, the United States, and Africa. The recovery of China's manufacturing industry has restrained the rapid decline of Asian manufacturing industry to a certain extent. Although China's manufacturing PMI fell back in April, it still remained at 50.8%, running for more than 50% for two consecutive months. In addition, as the development of the epidemic has been curbed, the manufacturing PMI of Japan and South Korea has narrowed from the previous month. Affected by the double impact of the epidemic and the drop in oil prices, the manufacturing PMI of Middle Eastern countries has remained at a relatively low level of about 44%. India and some Southeast Asian countries have been severely affected by the epidemic, and the PMI has dropped significantly from last month, both of which have fallen below 40%.
Global manufacturing PMI fell to 39.5% in April
Based on the impact of the epidemic on the Asian economy, the IMF predicts that the Asian economy will have zero growth in 2020. The Asian Development Bank said that the growth rate of emerging Asian economies will fall to the lowest level in 22 years. But the overall forecast for economic growth in Asia is better than in Europe and the Americas. In particular, the relatively stable performance of the Chinese economy will lead the East Asia region to take the lead in recovery. The IMF estimates that China's economy will grow by 1.2% in 2020 and is expected to resume growth of 9.2% in 2021. In view of the good results of China's epidemic control, many economic forecasting agencies have judged that China will be the fastest recovering country from the epidemic and have significantly promoted the economic recovery in other parts of Asia.
