Growth in Global Construction Industry Gaining Momentum
The latest market analysis from Timetric’s CIC, stipulates that growth in the global construction industry stabilised in 2015, standing at 2.7% in real terms, unchanged from that recorded in 2014. A slight acceleration is predicted in the output growth in 2016, with the pace of increase edging up to 2.8%, supported in part by an improvement in global economic growth.
The analysis pointed out that the Middle East and Africa will reportedly experience the fastest growth in 2016, at 5.9%.
“This is a slight deceleration compared with the rapid growth of 6% and above in recent years. Moreover, it reflects the impact of the decline in global oil prices, which has a negative effect on public investment plans and also spending on construction projects in the region’s energy sector,” states Timetric’s CIC.
Meanwhile, after three consecutive years of slowing growth, the Asia-Pacific region, which accounts for around 45% of the global construction industry, is set to expand by 4% in 2016. The downtrend in the region’s growth, explains Timetric’s CIC, is primarily due to the weakness in China, whose construction industry is estimated to have dropped to 5.2% in 2015, down from 6.8% in 2014 and 9.5% in 2013.
According to Timetric’s CIC, the industry in Asia-Pacific is not expected to continue to decelerate, in part because in China the authorities will attempt to support the economy with public investment and infrastructure programmes. Construction output in Australia will pick up again in 2016, having suffered a sharp decline in recent years in the face of difficulties in the energy and mining sectors.
For the US, it experienced a rapid expansion in their residential market, as well as spending on new projects in energy and power. Construction, which soared to an estimated 6.4% in 2015. “Whilst it’s still expanding, it’s predicted there will be a slowdown in growth in 2016 to more sustainable rates, but data on new construction starts will remain impressive, supported by the stronger state of the US economy,” reports Timetric’s CIC.
in Europe, the size of the construction industry in Western Europe is still some 14% smaller than it was before the financial crisis, but it is recovering and will post growth of 2% in 2016. States Timetric’s CIC: “Construction works in the UK will expand by around 3%, with government support for infrastructure and housing projects continuing. Having suffered contractions in output in 2015, the construction industries in France and Germany will return to positive growth in 2016, while in Spain there will be a continued recovery.”
It was further reported that Eastern Europe suffered two consecutive years of decline in 2014 and 2015, with Russia’s demise having an impact on other markets in the region. The construction industry in Russia will contract further in 2016 in real terms, with the weak economy and low oil prices continuing to curtail investment growth. Nevertheless, other major markets, such as Poland and Czech Republic, will expand, contributing to growth of 1.6% for the region as a whole in 2016.
Latin America, its states, will lag behind once again in 2016, with its construction industry expanding by just 0.8%. Construction output in the region fell by 2.5% in 2015, with Brazil’s construction industry estimated to have shrunk by 8.5%. Timetric’s CIC goes on to state that, “although works related to the 2016 Olympic Games in Rio de Janeiro will provide support, investment plans in general continue to be undermined by the fall-out from the Petrobras scandal.”