Construction Outlook Threatened By China And Elections
BMI View: The lack of growth in Q313 indicates that the recovery in Taiwan's construction activity is proceeding slower than previously expected, prompting us to revise down our full-year growth projections for 2013 from 2.0% to 1.1%. Looking at 2014, we are concerned that the structural deficiencies within the Chinese economy and the municipal elections in Taiwan could hamper construction activity. Given this unfavourable investment climate, we have revised down Taiwan's construction growth forecasts for 2014, with real growth for the sector expected to reach 1.9% (previously 2.9%).
The Taiwanese construction sector continues to be in a contractionary phase, though the resurgence in China's economic activity in Q313 and the construction of new homes has helped to slow the rate of decline. Latest figures from the National Statistics Bureau showed that Taiwan's construction sector contracted by 0.1% year-on-year (y-o-y) in Q313, slower than the preceding quarter (which contracted by 0.4% y-o-y in Q213) and the same quarter in 2012 (1.1% y-o-y in Q312).
Nevertheless, the recovery in Taiwan's construction activity is proceeding slower than previously expected. As such, we have revised down our growth projections for 2013 for the country's construction sector from 2.0% previously to 1.1%.
|Taiwan Quarterly Construction Industry Value Data|