The construction sector in Singapore is likely to grow by 3 per cent in 2019, supported by an expected short-term stronger performance in the building sector, according to a Fitch Solutions Macro Research report on 15 July 2019.
The sector’s short-term growth outlook is up from the previous 2.8 per cent forecast, following the research firm’s revision of its forecast for the residential and non-residential building sectors. The building sector, which accounts for some 70 per cent of the total value of the construction industry, is expected to grow at 3.2 per cent in 2019 and 2.3 per cent in 2020.
The commencement of construction on the North-South Corridor—which is set to start by the end of the year—will also boost the construction sector’s short-term growth, as reported in The Straits Times.
However, in the medium term, more sluggish days await ahead for the construction sector due to the poorer global economic outlook over the next few years, with the uncertainty surrounding US-China trade tensions and the possibility of recession. These will dampen demand for residential, commercial, industrial and retail spaces, resulting in a slowdown in the building sector. Growth is expected to weaken to 2.7 per cent in 2020 and 0.5 per cent in 2021 in real terms, Fitch said.
Over the next decade, the infrastructure sector will help cushion the cyclical slowdown in the building sector, Fitch added, with some 75 transport projects in the pipeline, including mega projects such as Changi Airport Terminal 5, the North-South Corridor Expressway and expansions to the rail network and cycling paths.
“We expect contracts for these initiatives to be progressively rolled out, providing opportunities in civil engineering and boosting the domestic construction industry,” Fitch said. — Construction+ Online