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Home > Manufacturing > Fabrication > Building/Construction
Thailand Infrastructure Report Q4 2008
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Industry Forecast Scenario
BMI forecasts that Thailand's construction industry will grow at an annual average of 5.1% in real termsover the period 2008-2012. In 2008, we predict that the construction industry will undergo real growth of5.8%. This represents a moderate downward revision from the 9.1% we had predicted for 2008 earlier thisyear, but is still faster than the estimated 2.4% witnessed in 2007. A fiscal stimulus package, togetherwith higher public investment in infrastructure (particularly railways) should support the outlook for theconstruction industry over the medium-term in Thailand. We have revised down our 2008 forecast for theconstruction sector because of the inclement external environment, amid an intensification of the financialcrisis in developed markets in September 2008. We have also revised down our 2009 forecast slightly forreal growth in the construction sector, to 5.0%, from 5.2%.
There is concern however that the five-year plan could strain public finances. The programme includesconstruction of mass transit systems for Bangkok and its satellite towns at a cost of THB556bn(US$13bn). Other projects include 450,000 new public housing units, spending on education and health,and improvements to marine and air transport infrastructure.
Risks to our forecasts are largely to the downside, particularly in 2009. The external threat generated bythe financial crisis in developed markets is the main risk factor, with much depending on how prolongedthe crisis is and how long corporate borrowing rates remain at prohibitive levels. In the worst casescenario, a prolonged recession in the US and elsewhere would severely crimp Thailand's export growth,GDP growth and government revenues, with attendant implications not only for commercial constructionin the country, but also public investment and infrastructure tenders.
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