Construction growth to slow to +2% in 2009

By Chris Sleight28 October 2008

Global construction growth will slow to under +2% in 2009, according to economic forecasting company Global Insight. This will be the slowest growth rate since 2002, when the worldwide industry grew by just +0.1%, and a marked slowdown from the intervening years when global growth was between +4% and +6%.

The North American market will be most affected with a contraction of -9%, driven by the downturn in the US.

Western Europe will a little better with almost no growth. Construction markets in France and Germany are expected to avoid recession, but downturns are forecast for Spain and the UK, and possibly Italy. Eastern Europe will slow but stay in positive territory, although there will be marked differences between Southern and Northern countries in the region.

Asia is expected to see a pronounced slowdown as its export markets slow. However, Global Insight says the region will still offer growth, with India faring better than China due to its lower export dependency.

Growth markets

The company says the Middle East and Latin America offer the best prospects for growth in the coming years, although the risk of falling commodity is a source for concern. However, Global Insight added that significant foreign currency reserves and fiscal surpluses amassed by many of countries in these regions will be sufficient to cushion the shock.

Developing economies in general are expected to continue to invest in infrastructure while their slowing export markets and personal income growth will reduce commercial, industrial and residential construction activity. Global Insight therefore expects the best opportunities over the coming years to be in infrastructure construction in emerging markets.

Recovery

Global Insight director of construction services Scott Hazelton said, " Global Insight expects that 2010 will be an improvement over 2009, but remain weak. No true recovery for construction markets is expected until 2011. However, the recovery could be steep and the needs of emerging markets remain great. The construction recovery, when it comes, should be strong."

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