Construction industry risk edges upwards, according to Timetric's Construction Risk Index
Based on the Q1 2017 update of Timetric’s Construction Risk Index (CRI), risk levels across the world have continued to rise, for the fifth consecutive quarter. The unweighted global average score rose to 41.98 from 41.88 in Q4 2016. In the advanced economies in the CRI, risk levels have eased marginally, dipping to 33.37 from 33.73, but in emerging markets there was an increase to 49.96 from 49.46.
Marginal improvements in Switzerland’s risk profile have pushed it into a top-rating of A1, alongside Sweden. The Swiss economy has adjusted to the appreciation in the Swiss franc, and there has been a slowdown in the property market, which has eased concerns regarding the risk of overheating. Hong Kong dropped two places to 7th, and was among the worst performers in the Q1 2017 update, with anxiety building over China’s economic slowdown.
In total, 23 countries recorded a deterioration in their risk profile in the Q1 2017 update. Mexico and Turkey recorded the sharpest drops. Turkey’s economy is struggling amid political turbulence and the sharp fall in the Turkish lira. Mexico’s woes stem from the potential negative fallout from the US president’s protectionist policy measures.
There were 24 countries that have recorded improvements in their risk profiles in the latest CRI update. Poland had recorded a sharp worsening in its risk score in 2016 owing to the impact on the country’s economy of a lull in funding from the EU. However, in view of the loosening in fiscal policy and the potential for a pick-up in investment, Poland’s risk profile has improved. Ireland’s economy continues to perform well, and after a steady worsening in its risk profile in 2015–16, Finland’s fortunes are starting to improve.
The risk score for the US has improved marginally, and it moves into 5th place. The US economy will continue to perform well, and there will be a boost to the construction industry if the new president, Donald Trump, progresses with large-scale infrastructure spending plans. However, the risk level in general is still higher than it was before Trump was elected, and this reflects general concerns over the relatively high level of policy uncertainty.
The Construction Risk Index (0=lowest risk; 100=highest risk)
Timetric’s Construction Risk Index (CRI) is designed to provide a standardized view of the underlying degree of country-level risk facing the construction industries in 50 major developed and emerging markets around the world. The model, which is updated on a quarterly basis, provides an analysis of current conditions and a forward-looking assessment of general and specific risks that could undermine the growth prospects for the construction industries, by preventing new projects from being executed, disrupting existing projects, or ultimately leading to project failures.
About this report
This information is taken from the Timetric report: ‘Construction Risk Index - Q1 2017 Update'.
CIC clients can access the report here
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