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Slowdown in Indonesia’s construction sector

Published by , Editor - Hydrocarbon Engineering
World Cement,

According to The Jakarta Post, difficult macroeconomic conditions and the country’s upcoming election are expected to result in a reduced rate of growth in the Indonesian construction sector in 2014.

BCI Asia Indonesia has predicted that the construction industry could secure Rp.493 trillion worth of new contracts this year, a 14.7% y/y increase compared to Rp.428.5 trillion of contracts carried out in 2013. However, this figure represents a decline in estimated annual growth from 2013, when the sector experienced a 39% y/y increase in new contracts compared to 2012.

Indonesia’s tough macroeconomic conditions, high rates of inflation, currency depreciation and Bank Indonesia’s rate adjustment are all factors that could lead to a fall in investments in the construction sector. Furthermore, the upcoming election, which will run over the next few months, could result in a delay in construction works.

BCI expects that the slow growth rate may not improve until the third quarter of the current fiscal year. Despite this, construction companies in the country are optimistic about the upcoming year and have considered the impact of the elections and economic conditions in setting targets for 2014.

Edited from various sources by Rosalie Starling

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