The construction industry output in Northeast Asia is forecast to record a growth of 6.8% in 2021, rising from US$4.47 trillion in 2020 to US$4.77 trillion in 2021 and accounting for 40% of the projected US$11.93 trillion of the global output this year. However, the regional outlook indicates construction industries across Northeast Asia are buoyant while at a national level, the performances of construction industries vary, according to data and analytics company GlobalData.
The company’s report, ‘Global Construction Outlook to 2025 (Q2 2021 Update)’, reveals that only China and Taiwan recorded real construction output growth in 2020. Among the others, only South Korea and Hong Kong are expected to recover and bounce back to pre-Covid-19 output this year.
Hong Kong’s early recovery is due in part to low pre-pandemic construction output, caused by a sustained downturn that began in 2016, said GlobalData. A cause for further concern is the slow recovery of the Japanese construction industry, the second largest in Northeast Asia, which is not set to surpass its pre-crisis output levels until 2025 following a 7% contraction in 2020.
“Construction output in Northeast Asia remains the largest by value globally, driven principally by the Chinese construction industry. China is projected to account for 81.8% of construction output in Northeast Asia and 32.1% globally in 2021, exceeding the output of the second-largest region, Western Europe, alone,” explained Willis Rooney, economist at GlobalData.
“According to GlobalData, estimates for regional growth this year have been revised upwards this quarter, from the previously held 5.9% growth estimate, due to stronger than expected growth in China and Taiwan.”
The Japanese construction industry had been stagnant before the pandemic, recording a compound annual growth rate (CAGR) of only 0.3% between 2016 and 2019. Growth between 2019 and 2022 is expected to improve slightly, with GlobalData’s current projections indicating a CAGR of 0.8%. Further growth is expected to be driven by a likely stimulus package of between JPY20 trillion (US$181.5 billion) and JPY30 trillion (US$272.3 billion) before the national elections later this year.
Mr Rooney concluded, “With the progress of vaccination programmes in Northeast Asia relatively gradual, the prospect of repeated outbreaks of Covid-19 will continue to pose a downside risk for the construction industry this year. While the average fully vaccinated rate in Northeast Asia is the highest in the Asia Pacific region, at 21.2%, it still lags other developed regions such as Western Europe and North America. A prolonged outbreak of coronavirus would severely impact the construction industry, setting back what is currently in many nations a very fragile recovery.”
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