SET-listed contractors heavily reliant on private sector construction may face challenges next year due to the economic slowdown, while those focused on public projects will likely benefit from reduced competition, according to Kasikorn Securities.

The firm said contractors taking mainly private sector jobs face higher risks due to slower economic growth, which could be affected by US President Donald Trump's recent tariff hike.

On April 2, Trump announced a 36% tariff on Thai imports, then paused enforcement for three months, starting from April 10, to allow time for negotiations.

Following this move, Kasikorn Research Center cut its Thai GDP growth forecast from 2.4% to 1.4%, maintaining public investment expectations, but lowering private investment projections.

Historical data from 1993 to 2024 indicates during economic slowdowns, public construction typically increases as governments raise megaproject spending to stimulate the economy.

In contrast, private sector construction usually declines in such periods, as seen during the 2008 global financial crisis and the pandemic.

As a result, large government projects currently in the pipeline are unlikely to be affected by the economic slowdown, while projects from the private sector may face pressure, noted the brokerage.

Listed contractors with a large private sector backlog are more likely to feel the impact than those focused on government contracts.

However, many listed contractors already have a backlog that covers more than 100% of their expected 2025 revenue, minimising downside risks for next year's earnings, according to Kasikorn Securities.

The impact is more likely to be reflected in 2026 forecasts, as a slowdown in private construction could start affecting new contract flows later this year.

Meanwhile, recent incidents such as the Rama II Road subsidence and the collapse of the State Audit Office building during last month's earthquake have heightened concerns over construction quality and increased scrutiny of contractor qualifications. As a result, upcoming government megaproject tenders may face less competition, as contractors with poor records may struggle to meet stricter qualification standards.