BEIJING: China’s construction sector will remain lackluster with slowing revenue growth this year due to ongoing economic hardships, global rating agency Moody’s predicted.
“The industry will see low-single-digit revenue increase, similar to the 2 percent recorded in 2015 and down from 8.7 percent in 2014,” said Lu Chenyi, a Moody’s vice president and senior analyst, citing construction companies’ large order backlogs and long lead times for project completion.
The construction of both residential and commercial buildings will likely be sluggish during the coming 12 to 18 months due to the economic slowdown, moderating property-sales growth and high level of developed but unsold properties in lower-tier cities, Lu said.
Despite a surge in property sales in the first quarter, the high inventory has caused property developers to slow the pace of new projects, which means fewer contracts for companies that construct these properties.
However, large companies — especially central state-owned enterprises — will report strong revenue growth from overseas owing to their technical expertise, strong brand equity, large scale and reputations, Moody’s said.
The rating agency believes the government will continue to invest heavily in railway, highway and road expansion this year to stimulate economic growth and improve inter- and intra-regional connections.
