Malaysia's construction sector to grow by 4% in 2020

Malaysia's construction sector will expand by 3.5 per cent, in real terms, in 2020, according to a report by Fitch Solutions.

Nominal growth of the country’s construction sector hit 1.1 per cent in 2019, but in real terms, a flatline growth rate of 0.04 per cent YoY was reported. Fitch expects the sector’s growth to expand, as construction activity across both the infrastructure and buildings sector in 2020 is sighted to pick up.

The pipeline of Malaysia's major rail and road sector is valued at US$51bn, accounting for more than half of the overall infrastructure projects at the planning and construction stages, according to Fitch’s Key Projects database.

Meanwhile, construction activity in the residential buildings sector, which makes for approximately 25 per cent of construction sector value, is expected to remain lukewarm, with the existing property overhang situation being slow to ease.

There remains a supply and demand imbalance, with an oversupply of high-rise, terraced and semi-detached housing, especially in the relatively populous states of Johor and Selangor, said report.

The government has also mentioned that they are contemplating the roll-out of a fiscal stimulus package to support slowing economic expansion.