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Wednesday, December 16, 2015

Construction Gross Value as a Percentage of GDP Has Is at a 25 Year High!

Last May 4, 2015, we noted that Construction Gross Value (Construction GV) at 11.21% as of the year-end 2014 was already well above its historical average of 9.48% of GDP since 1990.  This ratio has run at an above average rate since 2009 and has already eaten away at the "cumulative underhang" or underinvestment in construction that has taken place since 2004, when the excessive investment in construction that took place in the mid to late 1990's was being absorbed.

As of the 2nd Qtr of 2015, Construction GV as a percentage of GDP now stands slightly higher at 12.24% of GDP - an all time high for the past 25 years.  But the real story is that Cumulative Construction GV has gone well above equilibrium and now stands at 5.2% above equilibrium, a rise of 4.0% in just six months.  Given all the planned new projects that are already at the execution stage, the momentum in Construction Investment will continue.

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