07 Oct Airo AV Stated Global Construction Outlook to 2023
NEW YORK, Oct. 7, 2019 /PRNewswire/ —
Global Construction Outlook to 2023 – Q3 2019 Update
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This report provides a detailed analysis of the prospects for the global construction industry up to 2023.
The analyst has revised downwards its forecast for global construction output growth in 2019 to 2.7%, which will be the slowest pace of growth in a decade. The deterioration in construction output growth across emerging markets has been worse than previously expected, particularly in the Middle East, while some major advanced economies have struggled to generate growth momentum, including the US, the UK and Australia.
In China, where the authorities are stepping up investment in infrastructure to prevent a continued slowdown, growth will remain positive, contributing to a slight acceleration in growth in total output in the emerging markets. central forecast is for global construction output growth to edge up to 3.2% in 2020 and then to stabilize at 3.4% over the remainder of the forecast period, which runs to 2023. This is in part driven by a projected improvement in the global economy in 2020, which in turn relies improvements in financial market sentiment and a stabilization in some of the large currently-troubled emerging markets.
However, geopolitical risks are intensifying, and could potentially undermine investor confidence and disrupt capital flows in the early part of the forecast period. Risks to the overall forecast stem primarily from a possible escalation in the trade war between the US and China, and also inflamed tensions between the US and Iran following the recent drone strikes on Saudi Arabia’s largest oil processing center, which have been blamed on Iran.
There is also a risk that China could overstep its efforts to support the economy, resulting in an unmanageable debt crisis, which would disrupt investment trends globally, most notably via the impact on demand in commodities markets. There are also other major emerging markets facing domestic political and economic stresses that could erupt into full-blown crises, creating a risk of contagion across these markets.
The pace of growth in North America’s construction industry is expected to remain weak in 2019-2020, averaging 0.4%, before regaining momentum over the remainder of the forecast period as ongoing investments in infrastructure development will provide support for the region’s construction industry. Construction in the US has been particularly weak so far in 2019 owing to a dismal performance in the residential buildings sector. Activity in Latin America has also been very weak, and the analyst now expects the region’s construction output to contract by 0.2% owing to particularly poor performances in Argentina, Brazil and Mexico. There will be a recovery in Latin America in 2020, but the region’s construction industry will continue to be subject to downside risks, with investor sentiment undermined by policy uncertainty and economic fragility.
The Asia-Pacific region will continue to account for the largest share of the global construction industry, given that it includes the large markets of China, Japan and India. The pace of growth over the forecast period will average 4.3%, which is down from the 5.2% in the past five years. Although there will be an acceleration in growth in China in 2019, the general trend is one of slowing growth given the need for China’s government to try to curb excessive investment and avoid a disorderly debt crisis.
Moreover, reflecting recent years of overinvestment in residential construction and the resulting glut of new residential properties, building construction output growth will also decelerate.There will also be weakness in South Korea, which is experiencing a sharp contraction in construction works.
In India, positive developments in economic conditions, improvement in investor confidence and investments in transport infrastructure, energy and housing projects have helped the construction industry regain growth momentum. The emerging markets of South-East Asia will invest heavily in new infrastructure projects, supported by private investment, and this region will be the fastest growing, expanding by 6.4% in 2019-2023. Australia’s construction industry has plummeted, and the analyst now expects a 6.3% fall in 2019, in line with the sharp contraction in buildings work and a slower than expected rebound in infrastructure.
Construction activity growth in Western Europe is forecast to decelerate in 2019 and 2020.Reflecting the intensifying uncertainty in the UK over the Brexit process, and the likelihood of a sub-optimal outcome in terms of disruption to the economy, the analyst has adjusted downwards its forecast for construction growth in the UK.
In Germany, although the construction industry has been outperforming the overall economy, the gloomier outlook for the German economy means that construction will be dragged down.Nevertheless, ongoing efforts by the government to upgrade the country’s transport infrastructure on the back of the growing population and growth in the manufacturing, retail and tourism sectors will still provide support to the industry.
Monetary policy within the EU will remain accommodating for much of the forecast period, given subdued inflationary pressures and moderate levels of economic growth.
Construction activity across Eastern Europe expanded at a rapid pace in 2018, primarily reflecting recovery in a number of markets, as EU funding was restarted after a hold-up in 2016.There will be a return to more normal rates of growth from 2019, but construction in Turkey is set to suffer from the effects of instability in the economy, with higher interest rates and rising risk premiums undermining the outlook for economic growth.
In Russia, construction grew sharply in 2018, but it has remained fairly flat so far in 2019. However, investment in residential and infrastructure projects in addition to a recovery in the oil and gas sector will support a recovery in Russia’s construction output.
Growth in the Middle East and Africa region as a whole will steadily improve over the forecast period, following a contraction in 2018 and a relatively lackluster performance in 2019.Countries in the Gulf Cooperation Council (GCC) have suffered from weakness in oil prices in recent years, as government revenues have been greatly reduced.
Assuming oil prices stay relatively high, large-scale investment in infrastructure projects – mostly related to transport – will be a key driving force behind the growth in the region.However, the construction booms in a number of markets, notably Qatar, appear to have run their course.
The pace of growth in sub-Saharan Africa will be particularly strong, averaging 6.0% a year in 2019-2023. There will be a steady acceleration in construction activity in Nigeria, supported by government efforts to revitalize the economy by focusing on developing the country’s infrastructure. Ethiopia will be Africa’s star performer, with its construction industry continuing to improve in line with the country’s economic expansion, but the pace of expansion will ease back to single-digits.
– An overview of the outlook for the global construction industry to 2023
– Analysis of the outlook for the construction industry in major global regions: North America, Latin America, Western Europe, Eastern Europe, South and South-East Asia, North-East Asia, Australasia, the Middle East and North Africa, and Sub-Saharan Africa.
– A comprehensive benchmarking of 92 leading construction markets according to construction market value and growth
– Analysis of the latest data on construction output trends in key markets.
Reasons to buy
– Evaluate regional construction trends from insight on output values and forecast data to 2023. Identify the fastest growers to enable assessment and targeting of commercial opportunities in the markets best suited to strategic focus.
– Identify the drivers in the global construction market and consider growth in emerging and developed economies. Formulate plans on where and how to engage with the market while minimizing any negative impact on revenues.
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