US$ 375 billion construction boost from stimulus spending

By Chris Sleight26 January 2009

Research by iC shows that stimulus package spending could add US$ 375 billion per year to the world's construction output in this year and a similar amount again in 2010. This is equivalent to an additional 7.5% on top of the world's current annual construction output of about US$ 5 trillion, and equates to more than the annual construction output of Germany, the fourth biggest market in the world.

The total additional spending to shore-up economic growth in 20 major economies will come to US$ 1.95 trillion, of which US$ 820 billion has been ear-marked for construction. Most of this will be spent in 2009 and 2010, however schemes such as Brazil's housing-focussed package will be longer term.

Of all the major economies, China's extra investment in construction will be the most over the next two years, with US$ 450 billion of its US$ 585 billion stimulus package earmarked for infrastructure. That investment of US$ 225 billion per year for two years is equivalent to an extra +40% boost to China's US$ 540 billion per year construction output.

Details of the US stimulus package are yet to be finalised, but current indications are that US$ 130 billion out of the total of US$ 825 billion will be invested in transport and energy infrastructure. Canada menawhile has agreed a CA$ 30 billion (US$ 24.8 billion) stimulus package, some CA$ 20 billion (US$ 16.5 billion) of which will be spent on construction.

In Europe, Germany has unveiled a € 50 billion (US$ 65 billion) stimulus package, of which some € 18 billion (US$ 23.4 billion) will be invested in infrastructure.Meanwhile France has announced it will invest € 10.5 billion (US$ 14 billion) in infrastructure and public works and Spain's stimulus package includes € 11 billion (US$ 14.5 billion) for similar schemes.

Elsewhere in the world, smaller developing economies are also planning to spend extra on construction during the economic downturn. These include Chile, which has allocated an extra US$ 700 million to public works this year and Indonesia, where a stimulus package is also planned.

Besides funds earmarked for construction, many other countries have less specific stimulus packages on the table for this year which are expected to provide a major boost to the industry. Mexico for example plans to invest US$ 54 billion to see it through the global downturn this year, and most of the spending is expected to go on infrrastructure.

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