Construction activity is expected to slow across much of Northeast Asia this year, with the continued weakness in the real estate sector in China being the most significant drag on growth in the region. As a result, data and analytics company GlobalData has revised down its forecast of Northeast Asian construction output from its prior projection of a 3.8% annual growth to a growth of 2.4% in 2023.
GlobalData’s report, ‘Construction Market Size, Trends and Growth Forecasts by Key Regions and Countries, 2023-2027,’ reveals that the growth of the Northeast Asian construction industry is forecast to pick up to an expansion of 3.3% in 2024, as the downturn in the Chinese real estate sector begins to ease.
Willis Rooney, economist at GlobalData, said, “Construction output growth in China is expected to slow to an expansion of 2.7% this year, weighing on the regional growth, with growth elsewhere expected to remain relatively weak. Prominent risks to the construction activity in the region this year include the continued weakening of activity in the Chinese residential sector.
“Real estate investment in China declined by 8.4% last year and continued to slow in the first quarter of this year, falling by 5.8% in Q1 2023. Real estate investment is expected to decline again this year, though the decline will be less pronounced than in 2022.”
GlobalData added that further risks to the region’s outlook include the continued weakness in the South Korean construction industry, with weak external demand and a slowing of consumption growth likely to weigh on new investment in the short-term.
Mr Rooney concluded, “The construction industry in South Korea registered marginal growth of 0.2% in real terms last year, following four successive years of decline. The industry’s growth was constrained by the impact of multi-year high rates of inflation, the aggressive unwinding of monetary support by the Bank of Korea and the slowing global economic growth on new construction demand. These factors are expected to continue to weigh on the construction activity in South Korea this year, though full-year growth will pick up to a marginal expansion of 0.8%.”
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