According to the latest update of Timetric’s construction risk index (CRI), the overall level of risk facing the global construction industry eased marginally in 2Q15. An upturn in risk in emerging markets was offset by a slight decline in risk facing the construction industry in advanced economies. The risk score for emerging markets rose from 48.38 in 1Q15 to 48.73 in 2Q15, whilst for advanced economies, it dropped from 33.37 to 32.95 over the same period.
Sweden remains the lowest-risk country in the CRI
A total of 29 out of the 50 countries in the CRI recorded improvements in their risk profiles in 2Q, notably the Netherlands and Sweden, where construction activity is expanding at a healthy pace, whilst 20 countries posted a deterioration. Sweden remains the lowest-risk country in the CRI, but the Netherlands was the best performer in 2Q update, with its score rising 3.19 points, moving it to 18th place in the rankings. Greece was the worst hit, with its economy falling back into recession and a deadlock in negotiations between the new government and the EU-IMF over the bailout programme.
Economic risk has continued to rise steadily
Market risk improved marginally in the second quarter update. However, some key markets – notably France, Italy, Austria and Portugal – remain in trouble, but others, such as the UK, the Netherlands, Sweden, Germany and Ireland, are picking up. Economic risk has continued to rise steadily, reflecting the weak economic performance of some of the major countries, such as Russia. Moreover, the low oil prices, even if they are set to pick up in the second half of 2015, will still remain relatively low, greatly impacting oil-dependent economies. Financial risk has edged up slightly, part of this reflecting the fragility of a number of emerging markets reliant on revenues from exports of oil and other commodities, prices for which have fallen.
Comment from Timetric
According to Sina Zavertha, Economist at Timetric’s Construction Intelligence Centre: “Political risk is also picking up in key emerging markets around the world, greatly undermining investor confidence, and in many cases compounding economic fragility. Notably, the ongoing diplomatic conflict between Russia and the West over the former’s intervention in Ukraine is continuing to take its toll across the region.”
Adapted from press release by Katherine Guenioui
Read the article online at: https://www.worldcement.com/europe-cis/25062015/construction-risk-index-shows-signs-of-improvement-66/