Global construction output to grow +70% over next decade
By Chris Sleight14 September 2010
Global construction output will grow +70% from its current level of US$ 7.5 billion to US$ 12.7 trillion by 2020, according to a new report by Global Construction Perspectives and Oxford Economics. The economic forecasting company says this will see the industry claim a greater slice of world activity, rising from today's figure of 13.5% of global GDP to 14.6% in 2020.
Despite the slump of 2007 to 2009, which the report, Global Construction 2020, says has wiped US$ 650 billion off the value of global construction, a robust recovery and continued growth in key emerging markets is expected to drive the industry to new heights over the next decade. Indeed, the company says that overall emerging construction markets did not shrink overall during the economic downturn, although growth did slow from an average rate of +11.15 in 2006 to just +0.6% in 2009.
Forecasts for the next ten years say that construction in the emerging markets of China, India, Asia-pacific, Latin America, the Middle East, Africa and parts of Eastern Europe will grow by +110% to US$ 7 billion. In contrast, developed regions such as Japan, North America and Western Europe will see only a +35% rise in construction over the same period, from today's volume of US$ 4.2 trillion to US$ 5.7 trillion in 2020.
The strongest growth in the emerging markets is expected to come from the Asia-Pacific region, with a +125% increase in construction output over the next ten years. India and China are expected to be the most dynamic markets and Oxford Economics says that by 2018 China will be the largest construction market in the world. By 2020, it is expected to be worth US$ 2.5 trillion at today's prices, representing 19.1% of total global output.
Growth in Latin America meanwhile is expected to total +70% over the next decade. The Brazilian market will be one of the most attractive, thanks in part to construction work linked to the 2014 soccer World Cup and 2016 Olympic Games in Rio. Growth in the Middle East and Africa meanwhile is expected hit +83%.
Among the developed world markets, North America is expected to be the most dynamic, with strong growth forecast for 2011 to 2013, driven by a resurgent US residential market.
Western Europe is expected to be sluggish by comparison, with France, Italy and Spain being particularly weak. The construction market in Germany is forecast to grow more or less in line with the European average, while the Greek and UK markets will be above average over the ten-year period.
Japan meanwhile is forecasts to see the weakest growth of all major markets, with construction output in 2020 expected to be some US$ 100 billion per year lower than it was in 2003 as the population declines and infrastructure investment is restricted by large government debt. The country has already been overtaken by China as the world's second largest construction market, and the coming decade is expected to see it eclipsed by India.
For more information, visit the report's website.