Political/Monetary Developments Weigh In On Infrastructure Outlook


BMI View: We have turned slightly more bearish towards the near-term outlook of India's construction and infrastructure markets and have revised down our forecasts for both sectors accordingly. This downward revision is because some of the factors that are already dampening construction and infrastructure activity - namely non-conducive monetary conditions, lacklustre infrastructure activity and political risk - have grown in prominence in recent months.

As expected, India's construction industry value experienced a rebound in Q2 2013/14 (July-September). Latest estimates from India's Ministry of Statistics and Programme Implementation (MOSPI) show that real growth for the construction sector was 4.3% year-on-year (y-o-y) in Q2 2013/14 (July-September). This growth rate was higher than the previous quarter (2.8% y-o-y in Q1 2013/14) and the same quarter in the preceding year (3.1% y-o-y in Q2 2012/13).

This rebound in construction activity can be primarily attributed to a rebound in infrastructure output in Q2 2013/14, which we highlighted in our November 2013 analysis of the sectors ( see 'Construction Outlook To Darken Before The Dawn', November 12 2013). At the same time, we had stated our belief that the rebound would not be sustainable and our expectation for construction and infrastructure activity in India to remain weak for the rest of FY2013/14 in this November analysis.

In Decline
India - Estimates On Monthly Infrastructure Sector Output, % chg y-o-y (LHS); Quarterly Construction Industry Value Real Growth, By Date Of Release, % chg y-o-y (RHS)

or Register now for free to read the full article

This article is tagged to:
Sector: Infrastructure
Geography: India

Related products in our Store...

Check out our most popular reports below or view more in our store