"COVID-19, Construction Economy 'Severe'... March CBSI Falls Below 60 for the First Time in 7 Years"

[Asia Economy Reporter Kim Yuri] Last month, the Construction Business Survey Index (CBSI) fell below the 60-point mark for the first time in 7 years and 1 month. The decline in the March index is unusually similar to the situation before the 2008 global financial crisis. The industry expects that the economic downturn will continue this month as the COVID-19 pandemic has reduced new construction orders and worsened financing conditions.

According to the Korea Construction Industry Research Institute on the 1st, the March CBSI recorded 59.5, down 9.4 points from the previous month. In January, the CBSI sharply dropped by 20.5 points from the previous month to 72.1. Subsequently, it decreased by 3.2 points and 9.4 points in February and March respectively, showing a sluggish trend for three consecutive months. The 59.5 mark is the lowest in 7 years and 1 month, indicating the severe sentiment among construction companies regarding the business climate.

In particular, the index falling this much in March is the first time in 12 years. The Korea Construction Industry Research Institute judged this situation to be similar to the period before the global financial crisis. Park Cheolhan, a senior researcher at the institute, explained, "Usually, the index rises by 3 to 5 points in March due to increased spring orders, but the nearly 10-point drop in March is very unusual. This is the first time in 12 years since March 2008 (-16.8 points), when the global financial crisis occurred."

The New Construction Orders BSI fell 12.1 points from the previous month to 61.6, marking the lowest level in 6 years and 1 month. It was analyzed that construction companies are facing great difficulties as scheduled or planned construction orders have not been properly placed due to COVID-19. By company size, the BSI for mid-sized construction companies was 51.2, the lowest in 6 years. The institute judged that these companies are struggling not only with construction volume but also with financing. The difficulties faced by local construction companies also appear to have intensified.

The April outlook index rose 7.7 points from March to 67.2. Senior researcher Park said, "Although the construction business downturn is expected to somewhat improve in April compared to the previous month, the index is still only at the 60-point level," adding, "Due to the prolonged COVID-19 situation, the sluggish construction business conditions are expected to continue in April following March."

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