The Canadian construction industry is forecast to improve over the next five years, despite declining 1.7% in 2015, according to a report by Timetric’s Construction Intelligence Center (CIC).
CIC believes the market could reach US$ 321 billion by 2020.
Canada’s construction industry recorded an output of US$ 289 billion in 2015, falling just over US$ 5 billion from a year earlier. Factors such as fragile economic conditions, low commodity prices, poor fixed-capital investments and a high rate of unemployment contributed to its weak performance.
However, CIC said the industry’s future was getting brighter as its value was forecast to pick up from 2016 with investments in public and renewable energy infrastructure, commercial projects, and improvements in consumer and investor confidence.
Several government programmes, such as the Affordable Housing Initiative (AHI), New Building Canada Plan (NBCP) and Made in Canada, will also continue to support the industry’s growth over the five-year period.
The industry’s output value is expected to rise at a compound annual growth rate (CAGR) of 2.13% in real terms over the five-year period – down from 2.29% during the review period from 2011 to 2015.
Timetric expects the industry to increase from US$ 289 billion in 2015 to US$ 321.1 billion in 2020, measured at constant 2010 US dollar exchange rates.
Danny Richards, lead economist at Timetric’s CIC, said, “Growing population and urbanisation, and improvements in domestic manufacturing activities will likely be the main drivers behind the industry growth up until 2020.
“In addition, the government’s efforts to enhance the residential and public infrastructure will also contribute to the growth. For example, to provide affordable housing to the lower- and middle-class population, the Canadian government is planning to spend US$6.0bn in social infrastructure by 2020, which includes expenditure on renovation and new housing buildings construction.”
Residential construction is expected to take on more importance in the industry over the next five years, accounting for 38.4% of the industry’s total value in 2020.
The market will be supported by a rising population, urbanisation, and improving economic conditions.
According to the United Nations Department of Economic and Social Affairs (UNDESA), the country’s population is expected to reach 37.6 million in 2020 and 40.4 million in 2030. Government efforts to provide affordable houses to the lower- and middle-class population through AHI will also encourage growth in the market.