"Impact of Government Economic Stimulus Measures" December CBSI Hits Highest Level in 4 Years and 5 Months

January 2020 Index Expected to Fall 11.8 Points to 80.8

[Asia Economy Reporter Kim Yuri] In December last year, the Construction Business Survey Index (CBSI) surpassed the 90-point mark, reaching its highest level in 4 years and 5 months. It is analyzed that the government's announcement of investment plans to stimulate domestic demand, along with a higher volume of orders compared to previous years during this period, influenced the recovery of the index.

According to the Korea Construction Industry Research Institute on the 2nd, the CBSI in December rose by 11.5 points from the previous month to 92.6. The CBSI had been sluggish at 65.9 in August 2019 when the private land price ceiling system was announced, but showed a sideways trend in the 70s with 79.3 and 79.1 in September and October, respectively. Afterwards, it exceeded the 80-point mark at 81.1 in November.

The 92.6 figure is the highest recorded in 4 years and 5 months since July 2015, when it was 101.3. Recovery above the 90-point level is the first in 2 years and 6 months.

The Construction Industry Research Institute interpreted this as a partial improvement in the recently stagnant construction market. Park Cheolhan, Deputy Research Fellow at the institute, explained, "The government's investment plans to stimulate domestic demand, along with a higher volume of orders compared to previous years, had a decisive impact on the recovery of the index." Park added, "The new construction orders BSI was favorable for two consecutive months, recording 104.5 in November and 107.0 in December, and the construction work progress BSI also improved significantly to 98.9 compared to the previous month, indicating that the increase in construction volume influenced the index recovery."

Additionally, the government announced in December last year its 2020 economic policy direction to promote a rebound in the economy by pushing for investments worth 100 trillion won. It is analyzed that including numerous construction projects as part of the domestic demand stimulation measures positively affected the formation of the index.

The index for January 2020 is forecasted to drop by 11.8 points from December 2019 to 80.8. Deputy Research Fellow Park predicted, "Typically, in January, CBSI tends to decline due to seasonal factors where construction order volumes decrease compared to the end of the previous year. In January 2020 as well, new construction orders are expected to decrease and progress payments to be lower due to these factors."

This content was produced with the assistance of AI translation services.