Economic overview

Asia Pacific’s leading economies are struggling to achieve targets for growth, with domestic demand remaining weak.

South Korea’s manufacturing sector contracted in September. The country’s manufacturing PMI dropped to 48.8 from 50.3 in August. A figure of more than 50 is needed for expansion. Faltering domestic demand is one of the factors behind the slump. South Korea’s gas demand has been declining on an annual basis this year and the slump in the manufacturing sector will weaken it further. Gas consumption in South Korea is expected to continue to fall on an annual basis over winter. 

China’s official manufacturing PMI for September was unchanged from August at 51.1, driven by weak domestic demand. This could hit targets for economic growth in the third quarter. It also puts at risk China’s targeted annual GDP growth of 7.5%. The relatively weak level of economic growth for the country is resulting in lower levels of gas demand growth this year. Although gas demand and the need for imports will keep rising on an annual basis over the northern hemisphere winter, increases will continue to be at a slower pace than those seen in recent years.

The Japanese economy is still trying to find momentum following the sales tax increase in April. Japan’s manufacturing PMI for September was 51.7, and while this represents an expansion, it is only a modest one. The potential for an improvement in economic growth could support expansions in gas demand over the coming months. Gas consumption in Japan has been growing by around 2% on an annual basis so far this year.