Construction risk sees slight fall in Q2 2015
The overall level of risk facing the global construction industry eased marginally in the second quarter of 2015, according to Timetric’s Construction Risk Index (CRI)
The overall level of risk facing the global construction industry eased marginally in Q2 2015, according to Timetric’s Construction Risk Index (CRI).
An upturn in risk in emerging markets was offset by a slight decline in the risk facing the construction industry in advanced economies, according to the index.
The risk score for emerging markets rose from 48.38 in Q1 2015 to 48.73 in Q2 2015, whilst for advanced economies, the figure saw a quarter-on-quarter fall from 33.37 to 32.95.
Commenting on the second-quarter results, Sina Zavertha, economist at Timetric’s Construction Intelligence Centre (CIC), said: “Political risk is also picking up in key emerging markets around the world, greatly undermining investor confidence, and in many cases, compounding economic fragility.
“Notably, the ongoing diplomatic conflict between Russia and the West over the former’s intervention in Ukraine is continuing to take its toll across the region,” she added.
A total of 29 out of the 50 countries in the CRI recorded improvements in their risk profiles in Q2 2015, whilst 20 countries posted a deterioration. Sweden remains the lowest-risk country in the CRI, but the Netherlands was the best performer, its score raising by 3.19 points.
Greece was the worst-hit country, with its economy falling back into recession and a deadlock in negotiations between the new government and the EU-IMF over the bailout programme, according to Timetric.
Economic risk, meanwhile, has continued to rise steadily, reflecting the weak economic performance of some major countries, including Russia. Although expected to pick up during the second half of 2015, the researchers noted that low oil prices are greatly impacting oil-dependent economies.
Timetric also pointed out that financial risk edged up slightly during the period, reflecting the fragility of a number of emerging markets reliant on revenues from exports of oil and other commodities, the prices of which have fallen.
The CRI is updated on a quarterly basis, and provides an analysis of current conditions and forward-looking assessment of general and specific risks that could prevent projects from being executed, result in major disruptions to projects, or ultimately lead to project failures.
The CRI is based on five dimensions of risk: market risk, operating risk, economic risk, financial risk, and political risk. Each dimension carries is weighted differently.