Dubai – Business News Report|| Industrial activity across Asia continued to expand during October, yet the momentum of growth decelerated in several key economies that are major exporters of electronic chips. According to private surveys released on Monday, this slowdown serves as an indicator that the artificial intelligence boom may be losing some of its earlier vigor.
Simultaneously, markets are increasingly questioning whether the technology sector can generate returns that justify the massive scale of investments currently being poured into it. The data points to mounting pressure on export-dependent Asian economies, which are grappling with the ongoing war in the Middle East. This conflict has driven up fuel and food prices, thereby squeezing consumer spending and dampening business confidence despite sustained demand for chips and AI-related products.
Slowing Momentum in Key Economies
The surveys revealed a broad-based cooling of industrial activity in China, Japan, South Korea, and Taiwan throughout October. This trend suggests that the repercussions of the US-Israeli war on Iran have begun to curb the gains these economies were achieving from strong global demand for chips and AI products. Tensions are visibly impacting production schedules and order books across the region.
Toru Nishiyama, chief emerging markets economist at Dai-Ichi Life Research Institute in Tokyo, stated that the robust demand for chips and AI had previously masked underlying weaknesses in both Asian and global economies. However, he noted that the continuation of the Middle East war and rising fuel and food costs make it difficult for this situation to persist without significant strain on regional stability.
China’s Manufacturing Sector Cools
In China, the S&P Global Purchasing Managers’ Index for the manufacturing sector recorded 52 points in October. While this figure remains above the 50-point threshold separating growth from contraction, it represents a decline from 52.1 points in September. This comes after official data released on Saturday showed a contraction in Chinese industrial activity for the third time in four months.
Nguyen Hoang Nam, a China specialist at Capital Economics, remarked that purchasing managers’ indices reflect a loss of economic momentum in October following improvements seen in September. He highlighted that while the manufacturing sector saw only a slight downturn and external demand remained steady, the sharp drop in construction activity was more concerning, indicating waning corporate trust in government financial support.
Regional Divergence and Future Outlook
Japan’s industrial PMI fell to 53.3 points in October from 54.1 in September, marking the slowest expansion in seven months as production and new orders lost steam. South Korea saw industrial activity grow at its slowest pace in eight months, with the index dropping to 51.3 from 53.9. Taiwan’s index also declined to 54.9 from 56.7. Conversely, countries like Vietnam, Indonesia, and Malaysia accelerated their industrial growth rates compared to the previous month.
Asia had previously outperformed many global regions by leveraging strong demand for chips and AI products, boosting manufacturers and exports. However, the International Monetary Fund now anticipates a slowdown in Asian economic growth next year. It warned of escalating risks associated with energy shocks from the war on Iran and the possibility of an AI boom correction, revising 2026 growth expectations to 4.8 percent and 2027 to 4.4 percent.
This story was produced in the newsroom from the disclosed sources named above.
