ASEAN Manufacturing Slows as Middle East War Fuels Price Pressures

Manufacturers across Southeast Asia are beginning to feel the strain from rising costs and supply chain disruptions linked to the ongoing US-Israeli war against Iran. The ASEAN manufacturing purchasing managers’ index (PMI), released by S&P Global, fell to 51.8 in March from 53.8 in February, marking the weakest performance in six months.

S&P economist Maryam Baluch noted that “the most visible development was a notable intensification of price pressures.” Input price inflation surged to its highest level since October 2022, driven by energy costs and logistics challenges.

ASEAN Manufacturing

Indonesia’s PMI dropped sharply to 50.1, with economist Usamah Bhatti citing significant pressure on raw material supply. The Philippines saw its PMI fall to 51.3, while Vietnam’s PMI slipped to 51.2, alongside the strongest rise in selling prices in nearly 15 years.

Malaysia’s manufacturing sector showed modest improvement, supported by higher production and job gains, though purchasing activity slowed. Confidence fell to a seven-month low. By contrast, Thailand’s PMI rose to 54.1, buoyed by new orders and increased purchasing, though analysts warned of vulnerability due to reliance on imported oil and gas.

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