The short-term outperformance of the buildings sector will momentarily propel growth before slowing down in 2020.
The construction sector’s 2019 growth forecast was adjusted upwards to 3% from a previous estimate of 2.8%, according to a report by Fitch Solutions.
The adjustment came after upward revisions to projections on the residential/ non-residential buildings sector, which account for approximately 70% of the total value of the construction industry.
Overall, Fitch Solutions is expecting stronger albeit short-term growth in the buildings sector due to the private residential property index hitting a five-year high in Q2 despite the implementation of property cooling measures in H2 2018, as well as a rise in the supply of buildings in 2018.
Another factor for the short-term growth of the construction sector is the planned commencement of construction of Singapore's largest road project, the North-South Corridor, by the end of the year.
However, the construction sector’s growth is expected to weaken in 2020 and 2021 to 2.7% and 0.5% respectively, due to hints of elevated risks of a global recession over the coming quarters that is projected to have an adverse impact on demand of residential, commercial, industrial and retail space; whilst average annual growth is expected to be at 2.8% through 2028.
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