"SOC Budget Cuts... Construction Market Slump Continues" April CBSI Stalls at 60

[Asia Economy Reporter Yuri Kim] Last month, the Construction Business Survey Index (CBSI) slightly increased compared to the previous month but remained at the 60 level, marking the lowest figure ever recorded for April. The announcement of SOC budget cuts to secure funds for the second supplementary budget had a negative impact. Increased uncertainty in the real estate market also adversely affected the index.

According to the Korea Construction Industry Research Institute on the 6th, the April CBSI rose by 1.1 points from the previous month to 60.6. After hitting a 7-year and 1-month low of 59.5 in March, the CBSI increased by 1.1 points to 60.6 in April. The institute explained, "Although the index rose, the increase was only about 1 point," and "the index level is the lowest ever recorded for April."

Park Cheolhan, a senior researcher at the institute, analyzed, "The announcement of SOC budget cuts to secure funds for the second supplementary budget and the expanding uncertainty in the real estate market negatively affected the index." He added, "Typically, the index rises by 3 to 5 points in April due to increased spring orders, but the real economy was constrained by the COVID-19 pandemic, limiting the index's recovery."

In particular, the BSI for large companies showed poor performance, hitting its lowest point in 9 years and 8 months. It is analyzed that anxiety grew over potential delays in large government construction orders due to the government's SOC budget cuts. The contraction in housing transactions and increased uncertainty in the real estate market, along with poor financing conditions, also collectively had a negative impact on the index.

The CBSI for May is forecasted to rise by 0.7 points from April to 61.3. Park said, "The index is expected to remain in the low 60s," and "the sluggish situation is likely to continue in May as it did in April."

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