China and India infrastructure construction paves way out of crisis

China and India infrastructure construction paves way out of crisis

China and India are set to lead Asia’s construction sector out of its coronavirus slump, analysts say, as the two governments look to power infrastructure growth — and their economies — in the years ahead.

Advisory firm Oxford Economics expects China will see annual construction output contract 8% this year but surge to 14.5% in 2021. For India, output is expected to shrink 5.4% this year, with a rebound to 7.7% in 2021.

Oxford says activity should be back to pre-COVID levels by the first quarter of next year in China, and the second in India. China is set to remain the largest single construction market throughout the next decade, exceeding global average growth rates to reach nearly $1.4 trillion by 2030.

“A surge in infrastructure spending to support the post-pandemic recovery underpins the positive outlook for construction in China,” Priyanka Kishore, head of India and Southeast Asia economics at Oxford, told Nikkei Asia. “Beijing is focusing on large infrastructure investment projects and supply chains to propel the economy forward,” she said.

Oxford notes that China’s public safety nets have also been made more generous to encourage households to spend more of their savings. It says this, coupled with rising wages, will spur demand for a range of services such as entertainment and education, in turn creating demand for facility construction.