Global growth is slowing, the latest economic data for August has shown.
The extent of the slowdown – and in some regions a contraction – depends on how governments have responded to the spread of the Covid-19 Delta variant, which has largely depended on progress of their coronavirus vaccination programmes.
In South-East Asia, the purchasing managers’ indices (PMIs) for many countries, including Indonesia, Vietnam, the Philippines and Malaysia, showed an outright contraction in manufacturing sectors in August.
With fewer than one-fifth of populations in these countries fully vaccinated against the coronavirus, governments have had little choice but to impose lockdown measures to safeguard public health, despite the economic cost.
China’s manufacturing sector was broadly stable in August, but its services sector contracted sharply, the first decline since February 2020. Again, this was largely due to government-imposed restrictions on movement to prevent the spread of the Delta variant.
China’s vaccination rate is relatively high at around 61 per cent, but the government’s zero-tolerance approach to managing the pandemic means that stringent measures are imposed in response to a comparably small number of new cases.
Meanwhile, survey data for the US, eurozone and UK indicates that growth slowed but remained in positive territory last month despite the spread of the coronavirus in those regions. In fact, the eurozone’s PMI was just shy of a 20-year high in August, indicating a strong rate of expansion in both manufacturing and services.