According to HSBC, a slowdown in demand in the U.S., Europe, and China might harm Asian exporters.

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According to the chief Asia economist of HSBC, Asian exporters will face considerable problems as demand from important markets including the U.S., Europe, and China slows down in the coming months.

According to Frederic Neumann, who spoke to CNBC’s “Squawk Box Asia” on Monday, manufacturers in Europe are already cutting back fairly drastically, particularly in Germany.

The economist emphasised that Europe is a significant export market for Asian exporters.

According to the chief Asia economist of HSBC, Asian exporters will face considerable problems as demand from important markets including the U.S., Europe, and China slows down in the coming months.

According to Frederic Neumann, who spoke to CNBC’s “Squawk Box Asia” on Monday, manufacturers in Europe are already cutting back fairly drastically, particularly in Germany.

Keep in mind that Europe is a significant export destination for Asian exporters, the economist said.

In keeping with the shift in U.S. consumer spending away from products, we also anticipate a reduction in exports throughout the second half of the year. The slowdown in the U.S. and Europe will be a barrier for Asian exporters, he noted..

According to Neumann, the region’s exporters will face even more challenges as a result of the slowing Chinese economy.

The trade data very clearly demonstrates this decline in domestic demand. China is the third significant export market that we really need to be growing, but it doesn’t seem to be doing so. In light of that, a trade recession cannot be ruled out at this time, he continued.

China’s sluggish growth

China’s official manufacturing purchasing managers’ index decreased from 50.2 in June to 49.0 in July, according to data released last week by the National Bureau of Statistics (NBS).

Sequential PMI numbers show growth or decrease from month to month. Anything below 50 suggests contraction, while readings above 50 indicate expansion.

China is a crucial export market for several Asian nations, despite the fact that its economy grew by only 0.4% year over year in the second quarter. As a result, the entire area will be impacted if the second-largest economy in the world slows down.

According to Neumann, the manufacturing industry is currently the most fragile sector of the global economy.

He added that the slowdown will have a trickle-down effect on Asia’s growth. “That’s where we’re seeing the first signals of weakness coming through whether in the U.S., whether in mainland China, whether in Europe.

The economies of [South] Korea, Japan, Taiwan, and other regions that are heavily dependent on the global manufacturing sector include Asia. Therefore, the immediate deceleration will result in weaker growth in Asia, according to Neumann.

The pressure of inflation

According to the economist, the region’s increasing inflation has made the gloomy global manufacturing picture even more challenging.

“Another issue we face is inflation. That will be a difficult one. despite the manufacturing slowdown, we believe that will continue with us well into the year,” added Neumann.

He claimed that commodity prices have begun to “come off the boil,” which could lower overall inflation. He pointed out that underlying core inflation is still strong and is being fueled in part by rising wages and supply-chain problems.

Core inflation would probably increase price pressure, which will likely impact Asia’s exporters, according to Neumann.

Make no mistake, Neumann warned, “We are staring at very persistent core inflation.” Furthermore, supply chain problems in Asia are obviously having a negative impact on efforts to reduce price pressure in the upcoming months.

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