Euroconstruct sees flat 2011

Economic forecasting group Euroconstruct expects European construction output to fall by a marginal -0,1% in 2011. It will be the fourth successive year of contraction, following 2008's -3,4% fall, the crushing -8,8% collapse of 2009 and this year's -3,3% decline.

Moderate growth is expected to return 2012, according to the group's December forecasts, with output rising 2,0%, followed by a further 2,5% rise in 2013.

It will be the countries of central and eastern Europe that will lead the recovery, with a strong return to growth next year for Hungary and the Slovak Republic, while the construction boom in Poland will gain momentum, with a +12,7% rise in output. Although there will be a fall in output in the Czech Republic next year, the four countries that make up this Eastern region will see overall growth of +7,2% next year, as opposed to the -0,5% fall for the western countries.

The most troubled construction markets in Western Europe next year will continue to be Ireland and Spain, both of which are expected to see another year of double-digit declines in output. There is also expected to be a fall in construction output in Portugal next year. The Greek market may also be troubled, but it is not a country covered by Euroconstruct.

Shrinking construction output in Ireland, Portugal and Spain will be enough to more than wipe out modest gains in all the other Western European countries. The most convincing growth will be in the Nordic region, with Sweden forecast to see a +3,9% rise in construction output, while Norway will be up +3,3% and Finland is expected to see a +2,9% increase.

In terms of the larger markets in Europe, France looks like it will lead the way next year, with growth of +1,5% forecast, while Germany will not be far behind at +1,3%. The prediction for Italy is for a +0,9% rise in output, while the UK will languish with just a +0,2% increase.

Sector outlook

Euroconstruct is forecasting a return to growth for the new residential sector next year, with +3,0% growth coming following four years of declining output. The residential repair & maintenance sector is also expected to rise, following a more mixed history.

However, declines are forecast for the new non-residential construction sector as well as for civil engineering output, with respective falls of -2,4% and -2,1% expected.