ASIA (Asian countries are projected to see 2.9% to 4.7% GDP growth in the 1st Q of 2023):
Supply chain interruption issues look like they will worsen over the next couple of months as industrial production in China continues to face COVID lockdown issues. Contractors are experiencing material shortages, and delivery times on construction materials have increased from a normal 2 to 4 weeks to 6 to 20 weeks to arrive at the site and even longer in some cases.
COVID has impacted China with mass lockdowns, strong contact tracing programs, and a ban on international travel. The Chinese government has recently announced it is rolling back its “zero-COVID” policy, however, it may be too late for many Chinese citizens. The latest projections are that China could see more than 1 million related COVID deaths in the coming months.
COVID infections are rising relatively dramatically in some of China’s major cities. Many of China’s electronic/cell phone manufacturing factories have been closed for lengthy periods, allowing India and Vietnam an opportunity to take over this important manufacturing business.
The Chinese Government is expected to inject more financial aid for 2023 to get past the serious economic downturn that COVID has had on the Chinese economy.
China’s rapidly spreading COVID wave has turned many large cities into “no-go” areas as thousands of stores/shops and businesses remain closed. China’s Economy and construction sector are forecast to see more chaos as this latest COVID upsurge expands. The Chinese Government has ordered countryside/rural hospitals to prepare for a major COVID wave as millions of Chinese workers travel to smaller towns and villages in January to celebrate the Lunar New Year. This holiday event is considered the world’s largest human exodus.
China is plagued by some stark economic challenges as we transition into 2023. Millions of Chinese citizens in more than 50 cities/regions have been instructed to remain at home under partial or full COVID lockdowns.
China’s GDP growth rate for the 1st Q of 2023 is forecast to be between 3.2% and 3.6%, down considerably from 18 months ago. China’s economy is now growing at a slower rate than many of its Asian neighbors. This has not happened for more than 25 years. China’s zero-COVID lockdown course of action is one of the main reasons for this slowdown (many factories have been partially or fully closed for the best of 9 months or more).
The Chinese housing sector is in danger of collapsing. In some cities, the housing market is in free fall. Construction activity has slowed down considerably. Many construction workers are unable to show up for work due to the COVID lockdown protocols. Recent school graduates are having difficulties in obtaining work, the unemployment is very high for this age group. Supply chain issues are a big problem that will continue for the next 6 to 12 months.
China’s construction industry is experiencing a rapid slowdown from just 12 months ago. A slower growth rate appears to be the norm as we move into 2023. The halcyon days of record continuous construction growth would appear to be just a memory of how many highways, bridges, and high-speed rail projects can be financed and built in China.
Look for China to expand its overseas infrastructure financing/loans and construction presence and activities in Asia, Africa, and South America, as a lesser amount of Chinese domestic opportunities are available to the Chinese contracting companies.
Some Asian nations, such as India, Bangladesh, Malaysia, Sri Lanka, Indonesia, Singapore, Pakistan, Philippines, Thailand, Vietnam, and Laos, have a huge need for new highways, bridges, and other transport and power-related projects.
Japan’s construction industry, for the sixth year, continues to experience slow or minimal growth in its civil / infrastructure, home building, commercial, institutional and industrial sectors, perhaps mirroring Japan’s steadily declining and aged population.
Escalation/Inflation is increasing in Asia. India is up to 7%, Pakistan stands at more than 20%, and the Philippines and Sri Lanka are reporting 9+ % inflation rates.