Thailand’s construction sector expected to grow by four percent in 2022 and by five percent in 2023

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Steel rods at a construction site in Bangkok.

Thailand’s construction sector expected to grow by four percent in 2022 and by five percent in 2023

The South East Asia Iron and Steel Institute (SEAISI) provided updates during its 2022 SEAISI Steel Mega Event & Expo held in Malaysia on November 14-18 regarding construction sector developments in the ASEAN region. Given the numerous challenges the sector has been facing this year, the outlook is quite dim for the region, though such countries as Singapore, the Philippines and Thailand expect to see positive results.

The construction sector in Indonesia has successfully maintained its growth in 2022, though it has showed a slowing trend near the end of the year, increasing by only 0.63 percent year on year in the third quarter. However, it is expected that in the fourth quarter this year the growth will be positive and, as a result, the construction sector of the country will grow by around 5.8 percent in 2022.

The government’s budget was increased more than 45 percent in 2021 to accelerate the completion of delayed projects in 2020. However, the budget decreased by 14 percent to only IDR 365 trillion in 2022. Nevertheless, it is expected that the new capital of Indonesia (IKN) will boost construction in the near future. In particular, the construction will start from 2023 and it is estimated that about 9 million mt of steel will be required for the first and second stages.

The Malaysian construction sector is expected to remain vulnerable due to fluctuating oil prices, as it relies heavily on oil sector revenues, coupled with the rising costs of building materials, including steel, and workforce shortages. In the first quarter of 2022, the construction sector of the country decreased by 40.4 percent, while in the second quarter it contracted by 23.2 percent. “All sectors except construction showed better results in the second quarter,” a representative of the Malaysian market stated. Meanwhile, Malaysia’s construction market is expected to grow at a compound annual growth rate (CAGR) of approximately six percent during the forecast period 2022-2027.

In Singapore, the construction industry was “back to normal” this year, showing 7.8 percent growth in the third quarter and is forecast to increase by seven percent in 2022 driven by private construction demand. Besides, the country expects to see the same performance until 2027.

Thailand’s construction sector is expected to grow by four percent in 2022 and by five percent in 2023. It is expected that such large projects as Southern Motorway (THN 78 billion, $2.19 billion), Western Motorway 9 (THB 56 billion, $1.5 billion) and Hi-speed Train project (THB 300 billion, $84 billion) will drive construction in the country.

In 2022, construction sector growth in the Philippines is expected to reach 5.6 percent, the same as last year. Besides, the same figure is expected to be reached in 2023. The North-South Railway Project worth PHP 777.5 billion ($15.1 billion) is one of the most promising government projects aimed to improve economic and urban growth in the most populous regions of the islands by providing critical connectivity through railways.