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Risk across global construction industry is going up

Published by
World Cement,

According to the Q1 2016 update of Timetric’s Construction Risk Index (CRI), risk has risen marginally across the 50 countries covered in the model, with the unweighted average score rising to 41.12 from 41.01 in Q4 2015.

This was driven by an increase in risk in emerging markets that offset a slight decline in risk across the advanced economies in the CRI. The risk score in emerging markets averaged 48.84 in Q1 2016 compared to 32.91 in the advanced economies.

Only four countries in the CRI - Sweden, Switzerland, the US and Singapore - have the top rating of A1, with 10 following with a rating of A2. The US was upgraded to A1 in the Q1 2016 update, with improvements in market risk offsetting a slight rise in the economic risk. South Korea also improved performance to A2, reflecting marginal improvements in both economic and market risk.

The Philippines suffered a downgrade to a C1-rating. Construction in the country will continue to grow at healthy levels, supported by the improved economic conditions, but there could be a slowdown in investment growth amid the change in government following the forthcoming elections (in May 2016). Brazil has suffered a further drop in its ranking, falling to 42nd place in the Q1 2016 update, reflecting the overall deterioration in growth prospects for the local economy and the construction industry.

On a positive note, a total of 19 countries recorded an improvement in their risk profiles in Q1 2016 compared with Q4 2015. Romania is among the best performers in terms of improvements in its risk score, but it is still a C1-rated country. Portugal and Germany also posted solid improvements in their risk profiles, with Portugal rising four places to 36th and Germany four places to 11th.

However, a total of 25 countries have suffered a deterioration in their risk profiles. The sharp decline in oil prices has greatly undermined growth prospects in major oil-exporting countries and increases the risk of projects being put on hold or cancelled.

Adapted from press release by Joseph Green

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