GlobalData: Construction industry growth in Indonesia to slow down to 0.5% in 2020

Before the COVID-19 outbreak, the Indonesian construction industry was expected to continue to grow at a fast pace over the forecast period owing to the government’s plan to drive forward large-scale infrastructure developments. However, reflecting on the recent COVID-19 related disruption and the weaker outlook for economic growth, the construction output growth in 2020 is expected to slow down to just 0.5%, forecasts GlobalData, a leading data and analytics company.

The COVID-19 crisis has already impacted the construction industry in the first quarter of 2020. The construction value-add at 2010 constant prices has grown by 2.9% year-on-year during the first quarter of 2020 – the slowest quarterly growth rate since the first quarter of 2002.

Dhananjay Sharma, Construction Analyst at GlobalData, comments: “The disruption in construction activities will peak during the second quarter of 2020 and will start recovering thereafter in the following quarters. The commercial, industrial and residential segments would be the most affected segments while recovery would be supported by the government’s investments in the infrastructure segment.”

The Coordinating Ministry of Economic Affairs plans to revive the economy through a five-phased resumption of businesses and social distancing measures in the country from June 2020 onwards, with economy completely re-opening by late July or early August 2020.

Sharma concludes: “Investments in infrastructure would revive growth once the economy opens completely after COVID-19 subsides. This will be led by the investments in the relocation of the capital city, the work on which has been paused due to the pandemic outbreak.”

 

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