Euroconstruct sees 2011 recovery
By Chris Sleight08 July 2010
Delegates at the June meeting of the Euroconstruct group of economic forecasting companies heard that construction output across the region is set for another -4,0% contraction this year. The fall follows last year's -8,8% drop and the -3,1% decline seen in 2008.
The industry is expected to return to growth in 2011, with a 1,2% rise in output, followed by a stronger +2,4% gain in 2012.
But as far as the continuing recession is concerned, the worst hit construction markets in 2010 are those of Ireland, Portugal and Spain, which will see downturns in activity of -27.5%, -10,2% and -17,7%. Euroconstruct's coverage does not include the other so-called 'PIGS' country, Greece.
However, there will be some improvement in key markets this year. Construction output in Germany is expected to grow by +0,4% after only a short and shallow recession last year. The Hungarian, Slovakian, Swedish and Swiss markets are also expected to bounce back with rises of +2,8%, +4,8%, +2,1% and +1,1% respectively.
Most worthy of note is Poland, which has not seen any fall in construction output during the credit crisis and recession. Indeed, Euroconstruct's forecast for this year is for a +10,0% rise in construction, strengthening to +14,5% in 2011 and +14,1% the year after.
The buoyancy of the Polish economy, along with the recovery in Hungary and Slovakia means there will be overall growth of +3,7% this year in the four major central & eastern construction economies, a group that also includes the Czech Republic. That growth is expected to strengthen to +9,9% in 2011 as the construction output in the Czech republic starts to grow again.
Sector by sector
It is continued weakness in the new non-residential construction market that Euroconstruct blames for the continued European recession. Whereas 2009 saw the new residential segment bear the brunt of the downturn with a massive -24,7% fall in activity, the decline in that sector is seen slowing to -6,6% this year.
In contrast, the new non-residential sector is forecast for another -11,1% decline in output this year on top of the -12,4% fall seen in 2009.
The market for renovation is looking less weak, with only a -0,7% decline in the residential sector and a -1,9% fall in the non-residential sector forecast for this year.
The civil engineering market is also expected to see a dip this year, with a -1,7% decline in activity following on from the moderate growth of the last two years.
Looking ahead, the new non-residential sector is expected to be the last to emerge from recession, with another -1,1% fall in output next year. In contrast, new residential work is expected to rise by +3,7% and the civil engineering sector should go up by +1,1%. Output in the repair & maintenance sectors is expected to rise +1,5% in the residential market and just +0,4% in the non-residential market.