Asian counties are projected to see 3.1% to 4.2% GDP growth in the 3rd Q of 2026
We could see a slowdown / decline in Asian GDP growth if the conflict in Iran resumes again in the 3rd Q, the good news is that a ceasefire has been signed by both Iran and the US, however, the cease-fire remains somewhat tentative. The conflict could start again after the US mid-term elections in November, this ceasefire could conclude and we could see more military action, it is extremely difficult to forecast.
The # 1 question for the Asian construction sectors is how long will the Iran conflict last, will it cause inflation to spike in the next 3 to 6 months or perhaps a global recession.
Ten to fifteen years back, the majority of major US & European industrial / manufacturing companies were directing their CAPEX capital investments into China. However, with all the recent political posturing, territorial disputes & COVID related shutdown issues, China has experienced a slowdown in foreign capital investment. We are seeing more US, Japanese & Western European capital investment moving into India & (to a smaller extent) Vietnam. India is now viewed as the place to build new manufacturing / production facilities.
India’s economy is one of the fastest growing out of the world’s major countries, assisted by government initiatives / investment programs, major Fortune 500 consumer goods investments & new technology such as data centers. India’s construction industry is forecast to experience dynamic growth in the next 12 months. India has overtaken China in as the world’s most populated country in 2025, with a population of 1.45 billion.
India has plans to build at least 5 to 7 new nuclear power plants in the next 5 years, added to the numerous infrastructure highways, ports, & bridge type projects focused on providing the industrial base that India needs to grow now & in the future. India currently is experiencing a “golden” period; India is one of the world’s fastest growing economies. India’s construction sector is making significant headway - a visitor to India will see significant construction activity (roads, bridges, factories & new buildings) in just about all of India’s 28 states & 8 unions. The Indian Government is pumping billion of Rupees into Infrastructure / Hi-Speed Rail and Power related projects, look for this to continue in the 2nd half of 2026 and beyond. India can boast of one of the world’s most dynamic growth countries, the construction sector is on a sustained growth streak.
India’s construction costs have increased by 7% to 11%, related to the Iran conflict. Energy costs, petrol / diesel price increases, construction material costs, material shortages, labor costs and freight cost are the main drivers of this increase. Aluminum, steel, paint, lumber and electrical products are in short supply and the waiting list to obtain some of these products can be 4 to 8 weeks.
India & China are serious rivals; both countries have stationed a significant number of troops on the disputed border region that could turn out to be a “ticking timebomb” now and in the future.
China’s economic slowdown will continue in the 2nd half of 2026, which of course will impact China’s construction sector. China’s oversupply of housing / commercial property glut remains a big problem, that will drag on for possibly another 2 or 3 years.
The Chinese construction industry in 2026 is fueled by Civil / Infrastructure domestic projects. A number of Chinese EPC companies are actively chasing overseas opportunities - Projects like railroads, highways & ports, primarily focused on Africa & Asia. China’s real estate & construction sector continues to face challenges.
The Chinese commercial & housing sector is just about on “life-support” - this problem commenced 3 years ago, and so did the pace of homebuying which is trending significantly downwards. Issues include rising consumer debt and a lack of demand for new housing / apartment units / commercial property. The enduring downward decline in the housing market is a harbinger of major problems ahead. There is total oversupply of commercial & housing units. Anyone visiting China will notice numerous unfinished / abandoned or vacant hi-rise apartment buildings & a large amount of idle construction equipment / high rise cranes not being utilized. Less than 5 years back, China’s real estate development / housing market constituted 20% to 25% of the overall Chinese economy.
Japan’s construction industry (for the seventh year in a row) continues to experience slow or minimal growth in its civil / infrastructure, home building, commercial, institutional and industrial sectors, perhaps mirroring Japan’s steadily declining & ageing population. The Japanese construction sector is estimated to be $600 to $750 billion in 2026 or close to 8% of the country’s GDP.
Indonesia is the largest S.E. Asian nation with a population of 280 million & located on 100’s of islands, Indonesia has sizable O&G, timber & mineral resources. The Indonesian construction sector is valued between $200 and $220 billion per year, with its GDP growth between 4.2% and 5.2%. There are numerous O&G, mining and infrastructure projects being constructed. The future looks bright for the Indonesian construction sector.
South Korea has strengthened its standing as a leader in technology, microchips, shipbuilding, and FPSO construction. Other Asian countries such as, Malaysia, Singapore, Taiwan, Vietnam and Thailand appear to be set for construction related growth in the 2nd half of 2026, assuming the Iran conflict is diplomatically settled in the next 60 to 120 days.
Energy costs, petrol and diesel costs remain high, with more and more ships leaving the Straits of Hormuz. These high prices will start to moderate in the next 3 to 6 months.
