MTI Press Release on 2Q2007 - Construction

Improved Outlook for 2007

As Growth Broadens and Economy Diversifies

10, August, 2007.

The Ministry of Trade and Industry announced today that the economy is expected to grow by 7.0-8.0 per cent in 2007, riding on the momentum of the second quarter and supported by a favourable external environment and broad-based growth across the major sectors.

The construction sector grew by 18 per cent, the strongest growth in almost 10 years. Private construction was supported by robust growth in the residential, commercial and industrial segments while public construction was led by housing projects.

Outlook for 2007

The Ministry of Trade and Industry has raised the full-year GDP growth forecast for 2007 from 5.0-7.0 per cent to 7.0-8.0 per cent, taking into account a healthy external environment, the broad-based growth momentum across major sectors, continued growth in the composite leading index and strong business expectations.

The global economic environment continues to be healthy. Growth in the US has moderated but remains intact in the face of problems in the sub-prime credit markets. The Japanese and EU economies continue to recover on the back of strong domestic demand and firm business sentiment. Prospects in Asia remain robust, with the Chinese economy growing at a rapid pace.

The chief downside risk to this favourable external outlook is the potential for current problems in US credit markets spreading to other financial markets and possibly dragging down consumption and investment.

From a sectoral perspective, growth in financial and business services, manufacturing, and construction is expected to be higher than earlier envisaged. The driving factors underpinning this higher growth are broad-based: strong global demand in the biomedical, aerospace and marine industries, robust regional demand for financial services, and a buoyant domestic property market and construction industry with a steady pipeline of contracts awarded. The latest surveys of business expectations show that both manufacturing and services firms expect better business conditions in the coming half of the year.

THE CONSTRUCTION SECTOR expanded by 18% in 2Q07, its strongest growth since 3Q97. Growth momentum was robust, at 15%. Certified payments increased by 18% in 2Q07, supported by strong growth in the private residential, commercial and industrial segments as well as public residential segment. Contracts awarded increased 55% in 2Q07, due mainly to the rise in the private commercial and public institutional segments.