Construction, services growth set to shrink in Q1 in spite of public spending boost

Deflation risks are on the rise.

Growth in construction as well as in the services sector is likely to be weak in Q1 in spite of a number of boosts rolled out in the Jubilee Budget.

According to BofAML, private sector construction works will continue to contract in the first quarter while services will show slightly weaker growth in Q1 versus Q4 last year.

“We are not expecting the Budget 2015 measures announced last week to materially boost consumer spending or growth. Some of the measures - deferment of foreign worker levies, medical and education subsidies, conservancy & utility rebates, road tax rebates - with the exception of petrol duties - may on the contrary reduce inflation risks further. Falling COE premiums will also likely reduce transport price pressures,” stated BofAML.