The Euroconstruct network of construction forecasters is predicting that construction will grow more than its earlier estimates for its 19 member countries, with a increase of 1.8% for 2015. This is 0.3% better than it forecast at the start of the year.
Warsaw, Poland, was the venue for the 79th Euroconstruct conference, organised by the Polish PAB-PCR&F Institute.
In the first of two sessions at the conference, economists reviewed the consequences of recent changes in the macroeconomic and financial situation around the world, and updated their analysis and projections. They presented possible scenarios for the development of European residential, municipal, business and infrastructure construction sectors.
In the second session, topics included a look at the consequences of the adoption of new directives by the Council of the European Union concerning procurement. National public procurement rules, including those for construction works, are being standardised and significantly altered.
Euroconstruct said these changes would have an influence on terms and conditions, and the way public funds were spent on construction projects within the new financial framework for 2014 to 2020. Construction investment in the next few years should increase as a result of the implementation of European Commission president Jean-Claude Juncker’s financial plan, it said.
Increase in 2015
In 2014, there was a break in the recession that has dogged the European economy, said Euroconstuct, adding that the main reasons for economic recovery were the decline in oil prices and the considerably weaker Euro, as well as interest rates remaining low for financing.
Noting a fall in GDP in nine Euroconstruct countries in 2012 and six in 2013, it pointed to just one country in 2014 – Italy. It said that in line with its most recent projection, no negative changes in GDP were expected in any Eurocnstruct country in 2015 to 2017.
Euroconstruct said in its summer forecast for 2015 that it expected an increase by 1.8 % in the 19-country area, which was by 0.3 percentage points higher than in its earlier forecast.
For 2016 and 2017, the Euroconstruct forecasts a growth of 2% and 1.7%, respectively.
It said that as a result of the clear signals of improvement in the European economy, an improvement in the construction industry in the Euroconstruct area was expected after seven years of crisis and stagnation. The slowdown of activity in construction in Europe lasted longer than in the other sectors of economy, it said.
Construction output peaked in the first half of 2008, after which substantial falls in activity were recorded, reaching the lowest level in February 2010.
Between the first half of 2008 and the first half of 2010, the construction production index fell by almost 20% in total, it said, deteriorating to a level not seen since the first half of 1999. From this lowest point at the beginning of 2010, construction output remained relatively stable until September 2011.
Despite a period of relatively unchanged levels of activity during most of 2010 and 2011, Euroconstruct said the construction production index fell during most of 2012. The remainder of 2013 and 2014 was a period when the construction activity fluctuated but generally followed an upward path.
Euroconstruct said that within total construction output in the 19 countries, residential construction accounted for around 46% of the total activity, with a figure of €590 billion - new construction 18%, renovation and maintenance 27.5%. In 2006, prior to the financial crisis, this share amounted to over 48%.
Non-residential construction amounted to 29% in 2014, with a figure of €425 billion. Civil engineering made up the remaining 25%.
Euroconstruct expects growth in new construction of 10.1% in 2015 to 2017 in real terms, as compared to 9.2% in its previous forecast