All Overseas Construction 'Order High Kick'

Order Amount of $32.5 Billion... Highest in 5 Years
Recovery in Middle East Market & Growth in Latin America
50% Surge Compared to Last Year, Bright Outlook for Next Year

[Asia Economy Reporter Donghyun Choi] Last year, the overseas construction orders of the domestic construction industry, which had plummeted, took off. Despite the impact of the novel coronavirus disease (COVID-19), the recovery of the Middle East market and growth in regions such as Latin America helped the orders recover to the $30 billion level. Experts predict that next year, amid the economic recovery trend, the order markets in Asia and Latin America will revive.

According to the Overseas Construction Association on the 30th, as of 10 a.m. today, the overseas orders of domestic construction companies amounted to $32.5 billion (approximately 35.53 trillion KRW). This is the highest level in five years since recording $46.1 billion in 2015. Compared to last year, when orders plummeted to $21.6 billion due to the stagnation of the Middle East market and other factors, this is a sharp increase of 50.4%.

This year's rebound in orders was largely influenced by the recovery of the Middle East region, a stronghold of domestic construction companies. This year alone, orders worth $10.7 billion were secured in the Middle East, accounting for 32.9% of the total overseas orders. Compared to last year ($4.8 billion), the order amount more than doubled. The Middle East market, mostly oil-producing countries, is highly sensitive to international oil prices. At the beginning of this year, when the international oil price (Dubai crude) plunged to $19 per barrel due to the COVID-19 shock, the order market atmosphere was bleak. However, as international oil prices soon followed a steep upward trend and recently recovered to around $50 per barrel, the market recovered with large-scale projects for economic stimulus being ordered across the Middle East in the second half of the year.

It is also noteworthy that an exceptional order record was made in Latin America. This year, domestic construction companies recorded $6.9 billion in orders from Latin America, the highest since related statistics began to be compiled in 1966. The share of Latin American orders, which had lagged behind Africa in the past three years, increased to 21.2% of the total this year. Hyundai Construction secured the 'Panama Metro Line 3 Project' in Panama, the largest order in history, adding $2.84 billion, and Samsung Engineering won the $3.7 billion 'Dos Bocas Refinery' project in Mexico. An official from the Overseas Construction Association said, "Despite the difficult environment due to COVID-19, the government, companies, and public institutions worked as one team to consecutively win large-scale plant and infrastructure projects in the Middle East and Latin America," adding, "In Latin America, where Spain and China had been dominant, domestic technological capabilities and global competitiveness in commerce and finance were confirmed, enabling successful orders."

The outlook for the global construction market next year is also positive. According to global market research firm IHS Markit, the global construction market in 2021 is expected to grow by 4.8% from this year to reach $11.3 trillion. In particular, Asia and Latin America, where domestic construction companies have recently stood out, are expected to grow by 6.6% and 5.5%, respectively, suggesting a strong potential to emerge as solid order sources replacing the Middle East. Jihoon Jung, senior researcher at the Overseas Construction Policy Support Center, said, "Although the risk of COVID-19 spread is expected to persist next year, strict lockdowns and movement restrictions like those in the first half of this year are expected to be limited," and added, "Investment sentiment in the construction sector will revive due to gradual economic recovery and stimulus measures by various countries."

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