Escalating Crisis To Hit Infrastructure Hard
BMI View: The ongoing political crisis in Thailand continues to weigh heavily on our outlook of the country's infrastructure sector, with delays to key public infrastructure plans and Q114 figures on construction supporting this outlook. We believe we have yet to see the apex of the crisis, and this presents significant scope for the crisis to limit the growth potential in the infrastructure sector.
Since November 2013, Thailand's infrastructure sector has been heavily affected by the political turmoil gripping the country, and our outlook for the country's infrastructure sectors remains poor and highly uncertain based on the state of the country's business environment. Latest data from the Thailand National Economic and Social Development Board reflects this outlook. Thailand's construction sector has contracted in real terms by 12.4% year-on-year (y-o-y) in Q114, the deepest quarterly contraction since the global financial crisis, which reached 12.8% in Q408.
Looking ahead, we believe we have yet to see the apex of the political crisis and this presents significant scope for the crisis to limit the growth potential in Thailand's infrastructure and construction sectors. This, combined with the severe contraction in construction activity in Q114, has prompted us to revise down our 2014 forecasts for the construction sector (our construction forecasts include our outlook for the country's infrastructure sector, a major component of construction). We are now forecasting the construction sector to contract in real terms by 3.8% in 2014, compared to our previous forecast of 1.9% growth.
|Recession To Persist|
|Thailand Quarterly Construction Industry Value Real Growth, At 1988 Prices, % chg y-o-y|