Global growth expected in 2011

20 May 2010

Global construction activity is expected to remain flat during 2010 and then grow nearly +5% in 2011 according to the latest report from IHS Global Insight.

The first quarter construction outlook report said that growth of +1.9% is expected in 2010 with Asia performing well, Europe underperforming and the US somewhere in between. A spokesman said, "Asia's construction activity, led by China, will expand nearly +6% in 2010 after slowing to +2.5% in 2009."

The report said that while most construction activity in China over the past two years has been a result of massive stimulus investment, China's government is now becoming increasingly concerned about asset bubbles and an overheating of real estate markets.

This has prompted a series of credit tightening measures, which are focussed on dampening speculative investment while still enabling the government to expand the supply of low-income housing.

Across in the US, job growth has failed to mirror the recovering economy, which is hindering the construction industry. Total construction spending in the US is expected to fall -13.1% in 2010 following a -13.6% drop in 2009. "The fall in 2010 represents the fourth consecutive year of declines in construction activity," said the spokesman.

While stimulus funding bolstered growth in US infrastructure spending in 2009 by +1.1%, state and local budget cuts in 2010 will outweigh the increased federal spending.

South America has not been affected by the global financial crisis to the same extent as the developed world and as such IHS Global Insight expects a +4% growth in construction activity throughout the region this year.

In Western Europe the construction market is expected to decline -2.1% in 2010 after falling -9.1% in 2009. Positive growth is expected by 2011 with Germany, France and some Scandinavian countries already showing signs of improvement according to the report.

Weak demand for exports and limited access to credit are restraining growth in Eastern Europe, where a decline in activity of -1.1% is expected in 2010, following a -4% fall in 2009.

Investment in infrastructure and residential construction in the Middle East and Africa is expected to grow by +2% in 2010 following a -3.4% decline in 2009.

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