Construction output in Northeast Asia is forecast to grow 4.2% and reach $4.71 trillion in 2022 compared to $4.52 trillion in 2021, according to the latest world markets report by analytics company GlobalData.
The region, which includes China, South Korea, Taiwan and Japan, will account for 39% of the projected $12.19 trillion of global output in 2022.
However, output growth here has been revised downwards by 0.8% this quarter owing to the slowing construction activities across the region, according to the report.
It says that only China, Taiwan and Japan saw real construction output growth in 2021, while other countries in the region recorded a second successive contraction last year amid the pandemic. Of these, only South Korea is expected to recover to its pre-pandemic output in 2022.
GlobalData said it was concerning that the Chinese industry, the biggest in the world, saw its growth slowing to just 2.1% in 2021, with “headwinds” mounting in the first quarter of this year.
Willis Rooney, economist at GlobalData, said: “The growth of construction output in Northeast Asia slowed in the final quarter of last year, primarily due to another weak period of construction activity in the Chinese residential sector. Regional growth in 2021 dropped to just 1.9%, with the growth of the Chinese construction sector standing at 2.1%.
“Government restrictions on debt growth at Chinese real estate developers are expected to soften new residential development in the short term, and this is expected to be further exacerbated by falling home prices and sales volumes.”
Elevated debt levels at Chinese local governments may further temper the construction growth in China this year, the report said, with the capacity of local governments to invest in infrastructure constrained.
Rooney said: “A tightening of restrictions in Hong Kong and the lockdowns of Shenzhen and Shanghai in China following severe outbreaks of Omicron are likely to have weighed on construction activity in the first quarter of this year.
“However, with an ambitious economic growth target of 5.5% set at China’s National People’s Congress in March 2022, further fiscal stimulus and an easing of monetary policy is expected this year, which will underpin regional construction growth in 2022.”