The protracted COVID-19 pandemic and rising number of daily infections has prompted the Thai government to impose a partial lockdown. This measure includes a ban on construction activity at large projects for at least one month, effective June 28 – July 28, 2021, in provinces designated as dark red zones, namely the Bangkok Metropolitan area and four other southern provinces (Narathiwat, Pattani, Yala and Songkhla), where the value of construction projects accounts for approximately 54 percent of Thailand’s total construction value or equivalent to around THB700 billion.
KResearch preliminary assesses that the impact of said measure on the overall construction industry will amount to roughly THB36.2 billion. It will likely be felt mainly on public infrastructure construction projects in the Bangkok Metropolitan area. However, such impact on construction projects in four other southern provinces will be limited as the combined investment value in their construction projects amounts to only 2 percent of Thailand’s total construction investment. Due to the one-month ban on construction activity in the above mentioned zones (despite there being the government’s relief measures for some employers and workers, plus relaxation on certain types of construction activity) and the persistent COVID-19 pandemic along with the rising number of daily infections, it is expected that investment in the Thai construction industry will contract 3.8 percent in 2021 (against the 1.2 percent growth reported for 2020) or equivalent to approximately THB1.27 trillion. However, close monitoring must be made of COVID-19 containment measures, and the possibility that the short-term ban on construction activity will be imposed in other risky provinces or zones. If other provinces are subject to the ban and this measure is prolonged, such impact on the construction industry and related businesses will likely be greater than the above estimate.
1/ A steeper contraction than our prior estimate of approximately -1.5 percent before the short-term ban on construction activity was imposed.