Growth to slow

19 March 2008

Euroconstruct, a group of economic forecasting companies based around Europe sees European construction growth slowing this year following a peak in 2006. According to the group, which compiles data on 19 of Europe's largest construction markets, growth this year will slow to +2.4% from +3.7% last year. The slowdown will continue in 2008 with a +1.8% increase before picking up slightly in 2009 with +2.0% growth.

The strongest overall growth this year is expected to be in Central & Eastern Europe (CEE), where the largest market, Poland, will lead the way with a +10.6% increase. This will help the region's construction market to grow +7.6% this year, compared to +2.2% for Western Europe.

While growth in Western European construction is expected to slow over the next two years, the CEE region is forecast to go from strength to strength. The rate of growth is expected to pick up to +7.8% next year, with a jump to +9.7% in 2008.

The residential construction market is the main reason for the slowdown across Europe. Growth in this sector, which accounts for 48% of European construction output, is expected to be just +1.3% this year, slowing further to +0.5% in 2008.

In contrast, both the non-residential and civil engineering sectors are expected to maintain more reasonable growth levels. Civil engineering output is forecast to grow +4.0% this year, with smaller increases of +3.3% in 2008 and +3.5% in 2009. Similarly the non-residential market is currently at a peak in growth, with a +3.5% increase in output expected this year. Next year will see this slow to +2.9% and then +2.8% in 2008.

Euroconstruct says the total value construction output this year will be 1417 billion (US$ 1955 billion) across the 19 countries it covers.

Interestingly, it says the largest market is Spain at € 217 billion (US$ 299 billion), which has overtaken Germany's € 214 billion (US$ 295 billion) construction sector for the first time this year. These two are followed by the UK at € 204 billion (US$ 282 billion), France at € 193 billion (US$ 266 billion) and Italy at € 189 billion (US$ 261 billion).

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