Construction Growth Slowdown Still Expected

BMI View: Despite a strong performance by the residential and non-residential buildings sector in Q313, we continue to expect construction activity in Malaysia to slow its pace of expansion in 2014. This is because we expect the demand for residential and non-residential buildings to fall in 2014, while fiscal concerns will continue to present financing risks for public-funded projects, particularly within the infrastructure sector. Having said that, the government has been very successful in attracting foreign and private sector parties to implement and finance its investment plans, and we believe this success is a positive tailwind for construction activity.

The slowdown in Malaysia's construction growth has taken a respite in Q313. Latest figures from the Malaysian Department of Statistics show that real construction growth came in at 10.2% year-on-year (y-o-y) in Q113. This is a marginal increase from the 9.9% y-o-y seen in Q213, but much lower than the growth of 17.9% in Q312.

This respite was primarily due to a pick-up in work done for the non-residential building sector, with growth in non-residential work reaching 9.9% y-o-y in Q213. This was much higher than the 0.5% y-o-y in Q213, but still lower than the growth of 16.1% y-o-y in Q312.

Decline Checked
Malaysia Quarterly Construction Industry Data

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This article is tagged to:
Sector: Infrastructure
Geography: Malaysia