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South Korea Infrastructure Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: August 2009 Product Code: R302-7636 Description South Korea’s construction industry has been hit by the global economic downturn, with the impactalready highly visible on the sector. In BMI’s Q409 South Korea Infrastructure Report we are forecastinga contraction of 16.73% year-on-year (y-o-y) in 2009, reaching a value of KRW62.40trn (US$50.69bn).Although the country’s infrastructure sector has experienced a slow-down in the year so far, there arepositive signs emerging from the industry that activity is due to pick up. In the transport sector, the government has announced a major expansion project for the country’s mainairport, Incheon International. The US$3.1bn project includes a new passenger terminal and increasingcapacity by 41% to 62mn passengers per year. It is also involves upgrading transport links to the airport. Evidence of work progressing in the subsector came with the completion of two expressways in July2009, both of which were sponsored by Macquarie Korea Infrastructure Fund. Renewables and the umbrella term of green initiatives continue to be a major element of the country’sinfrastructure sector, and indeed its economic stimulus efforts. The country announced a green new dealin early 2009, pledging an investment of around KRW50trn (US$39bn) for green initiatives in order tocreate jobs and stimulate the economy. This has been followed by efforts to build up a local industry forrenewable energy technology and components, the launch of the fist tidal power plant in the country,pledges by the nine state-owned power companies of combined investment exceeding US$2bn from 2009to 2011, and the entrance of JP Morgan to the country’s green sector in June 2009, with plans to launch aUS$1bn investment fund called Korea Green Funds. The government’s efforts to sustain activity in the construction industry, or at least make up for some ofthe diminished private sector investment, appear to be bearing fruit, and indeed have prompted a revisionin our GDP forecast for 2009, up from -3.3% to -1.9% for 2009. This in turn provides upside risks for ourforecasts for the construction industry, especially for 2010, when the funds should filter through toactivity. Indeed, South Korea has released Q408 data for the construction industry including sub-sectorbreakdowns and data from Q408 showing that civil construction, i.e. infrastructure, actually grewcompared with the same period in 2007, by 11.14% in nominal terms. However, the picture from the non-infrastructure sector looks bleak, meaning that we are maintaining ourforecasts for the construction sector as a whole for the time being at least. The Q408 breakdownillustrates that the residential and non-residential construction industries have both been hit hard with anominal contraction of 24% and 7.5%, respectively, compared with Q407. Table of Contents
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