According to the latest update of Timetric’s Construction Risk Index (CRI), the overall level of risk facing the global construction industry increased in 3Q15, reaching its highest level in four quarters. This reflects a worsening risk profile across most emerging markets, which has offset the small improvements visible in that for advanced economies.
15 of the 50 countries improved their risk profiles in 3Q15. One of the most notable was the US, which rose by two places to 4th place in the rankings, due to the continued growth in its economy and construction industry. South Korea also showed significant improvements as it benefitted from a recent upgrade of its sovereign credit rating. The top three positions were unchanged, comprising Sweden, Switzerland and Singapore.
The bottom of the rankings was also unchanged, with Greece, Argentina and Venezuela remaining the highest risk countries in the CRI. Malaysia performed worst in the 3Q15 update, with its risk profile deteriorating following a major corruption scandal engulfing the country’s prime minister and a sharp decline in the ringgit.
The Asia-Pacific region was the worst performer in the 3Q15 update, based on aggregate risk scores for the major regions. Alongside the problems with Malaysia, the outlook for China’s economy was also worrying, with the country’s policymakers facing the challenge of rebalancing the economy while attempting to maintain a high rate of growth. Due to China’s significant role in supporting growth in Asia and also in its trading partners, a sharp slowdown in China’s economy would be felt widely across the globe.
Low oil prices continue to contribute to a worsening risk profile for the Middle East and Africa by stopping investment in new and ongoing infrastructure and building projects.
The region presenting the highest risk continues to be Eastern Europe, partly due to the fallout from Russia’s intervention in Ukraine.
According to Danny Richards, Lead Economist at Timetric's Construction Intelligence Centre (CIC): “The likelihood that the US Federal Reserve will raise official interest rates in the near future, and thus bring to an end nearly seven years of ultra-loose monetary policy, will have severe implications for many emerging markets that have become accustomed to cheap foreign capital. Indeed, a return to more normal levels of the cost of borrowing in advanced economies, particularly the US, will result in capital flowing out of emerging markets and contribute to a further weakening in their currencies.”
Adapted from press release by Rebecca Bowden
Read the article online at: https://www.worldcement.com/asia-pacific-rim/23092015/timetric-releases-update-to-cri-650/