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South Korea Infrastructure Report Q1 2010Published by: Business Monitor International Published: Nov. 5, 2009 - 85 Pages Table of Contents
AbstractThis quarter BMI has introduced new data series for infrastructure and its subsectors (Transport andEnergy & Utilities). This is an effort to address a significant deficiency in the availability of globallycomparable, infrastructure-specific indicators and forecasts across a wide range of countries. BMI's newinfrastructure data series enables users to quantify trends and growth patterns in the infrastructure sectorsof the 35 main emerging and developed markets out of the 62 countries in BMI's Infrastructure service.South Korea’s construction industry has been hit by the global economic downturn, with the impactalready highly visible on the sector. However, government measures to funnel money into the country’sconstruction industry have cushioned the blow. In BMI’s Q110 South Korea Infrastructure Report weestimate that the value of the construction industry will contract by 4.55% year-on-year (y-o-y) in 2009,reaching a value of KRW63,711trn (US$49.97bn). Using our new data we are estimating that the portion of the construction industry value that is made ofinfrastructure is 36.7%, a marginal decrease from the actual data from the Bank of Korea for 2008, wheninfrastructure accounted for 37.2% of the construction industry. We are forecasting the infrastructure industry to contract by 5.6% y-o-y in 2009 to reach a value ofKRW23.39trn (US$18.35bn). This contraction is evidenced in the small number of new projects recordedthis quarter in the transport and energy and utilities sectors. In the first half of 2009 we saw sustained activity in the country, and the real growth figures for Q1 andQ2 reflect this with the construction industry as a whole actually having grown y-o-y, by 0.4% in Q109compared with Q108 and by 2.2% in Q209 compared with Q208. The government’s efforts to sustainactivity in the construction industry, or at least make up for some of the diminished private sectorinvestment, appear to be bearing fruit, and indeed have prompted a substantial revision in ourconstruction industry real growth forecast for 2009, from -16.73% to -4.55%. Despite this, in the secondhalf of the year we have seen little activity and therefore we are maintaining our forecast of a contractionin the industry. However, the data for the first half of 2009 undoubtedly represents upside potential forour forecast. The biggest project announced this quarter has been the plans to create an underground road networkstretching 149km in Seoul. The project is ambitious and provisional estimates put the price tag atKRW11.2trn (US$9.1bn). Although the project will provide a boost to the infrastructure industry, it is notscheduled to begin until 2010, and therefore will not affect our 2009 forecasts for construction industryand infrastructure breakdown. This joins another major new project in the transport sector that wasannounced last quarter in June, a US$3.1bn expansion project at Incheon International Airport. Combined, these two projects present an upside risk for the percentage of infrastructure industry formedof transport infrastructure. Already, it accounts for a larger portion than energy and utilities, estimated at56.6% in 2009. This is set to decline over the mid term, but if these projects get off the ground it willpresent an upside risk to this. In the utilities sector, there has been little new activity, however, there are projects under way, includingconstruction of new nuclear power plants. The country is at the centre of the growing focus on renewableenergy, developing both the technology and increasing the portion of electricity generated by renewables. The country is developing the world’s largest tidal power plant, which is due to be completed by the endof 2009 and in September, Korea Electric Power Corporation (KEPCO) announced a US$2.3bn plan todevelop green technology for power generation. The investments are due to begin in 2010. Get Full Details About This Report >> |
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