Global Construction Prospects 2020

The forecast review period is analysed between 2019-2023. In 2019, generally all global economies revised their construction growth rate and reported a slowing construction output compared to the previous review period.

Responsibility is placed on governments globally for investment in infrastructure projects, reducing risk over trade deals and the support of improved financing to assist the construction sector. Most global construction markets are expected to improve from around midway to the end of the review period (2019-2023) supporting a steady growth forecast for global construction output.

Global News Wire reported that global construction output is set to rise to 3.5% in 2020, this growth is due to construction activity in emerging markets. It is anticipated that during 2020 established markets, like the U.K. and the U.S., will be impacted due to Brexit uncertainty and trade tensions respectively.Asia-Pacific has a more positive outlook and currently holds the largest share in the global construction industry and is forecasted to maintain a growth rate to 4.4% during the forecast period.

North America

2018 was a healthy year for the U.S. and Canada construction industries, with continuous growth forecasted over the period 2019-2024, as reported by Mordor Intelligence.

The North American construction industry growth is reliant on easing trade tensions and a general economic growth uplift. For the U.S., construction is the largest contributor to the economy with an anticipated value of $1.3 trillion (Statista) for 2019 and this is forecasted to reach $1.45 trillion by the end of the review period (2023). The U.S. is faced with increasing construction costs for materials and labour, which could affect the cost of delivering projects.

Continued growth is reliant on investment from the U.S. government in infrastructure projects such as roads, energy and utilities, and expansion of communication networks over the forecasted years.

Latin America

Across Latin America construction growth expanded at a moderate pace in 2019, at approximately 1.1%. This is expected to continue throughout 2020, a greater growth rate is forecasted from 2020 through to 2023 of 2.6% (average, annually) according to KHL.

For 2019, Mexico held the highest construction industry value (GDP from construction) improving on the 2018 results and this is set to grow consecutively to 2023. Brazil, Colombia and Chile, which follow as the highest value construction markets in the region, all recorded a slump for 2019. This is expected to pick up from 2020-2023.

The economy growth rate will be supported by investments in the mining sector (Peru), a strengthening oil and gas market (Colombia) and investment in public infrastructure. Chile’s construction sector will benefit from a healthy pipeline of projects driven by positive commodity prices.

Europe

It was reported that the Euroconstruct area experienced a growth rate of 3.1% for 2018, equating to 1,610 billion Euro followed by a moderate growth forecast rate of less than 2% for 2019.

Infrastructure will be the key market within the region over the review period to 2023 to maintain construction growth. France will contribute towards this by implementing upgrades to transport infrastructure to meet the country’s expanding demands, and perhaps preparing for the 2024 Summer Olympics, and emphasis placed on the German government investing in the country’s transport infrastructure.

Despite the threat of Brexit potentially affecting the U.K. (construction) economy, it is envisaged to be the leading construction market by 2030. Compared to Asia, Europe is falling behind with investments made to the much-needed infrastructure sector, with developed countries in Asia investing approximately 36.8% of the collective GDP opposed to 21% from the Euro Zone. Bloomberg Intelligence suggests construction infrastructure expenditure could reach up to $1 trillion over the next 10 years – including infrastructure sectors such as energy and transport.

Africa

In 2019 The World Bank reported sub-Saharan Africa overall GDP grew from 2018 to a rate of 3.4%.

Political uncertainty and weakening economic reforms could hinder future economic growth. The region requires continual investment in infrastructure to meet its development objectives. OECD identifies the objective aims to support Africa’s integration and growth by easing trade and adoption of new technologies.

The plan would establish Africa’s in-land transport corridors or developing the Trans-African Highway network — this in turn would support Africa’s trade volumes, which are currently affected by underdeveloped infrastructure networks. Infrastructure finance is provided by both African governments and other institutions; in 2016 42% of infrastructure funding came from African governments (OECD). In 2019, OECD reported Africa’s infrastructure needs remain substantial with a demand value of up to $152 billion over the next decade equivalent of up to 6.9% of GDP.

There are limitations that could hinder the success of infrastructure development, however this could be mitigated by improving financing constraints and the implementation of new public-private partnership (PPP) opportunities.

Asia

China, Japan and India hold the largest value of construction within the Asia region, however construction generally is not the largest contributor to the country’s GDP output.

Southeast Asia has the fastest growing construction economy of the region and the Philippines and Vietnam are third and fifth respectively worldwide for construction growth (as of 2019 according to Asia Property Awards). Manilla should benefit from the government’s investment plans to improve travel around the city and access to the airports, which in turn will create job opportunities and encourage economic growth. The Malaysian construction sector is also strong ranking globally at 15th supported by government plans for affordable housing, the country’s market is growing albeit at a slower pace. Singapore’s construction market also grew steadily in 2019 and is expected to be influenced in the future by the governments implementation of Integrated Digital Delivery (IDD).

Australia

Over the review period from 2019-2023, Australia’s construction industry output is expected to rise, an improvement compared against the previous review period (2014-2018). KHL reports that the construction industry is estimated to grow by an annual growth rate of over 2%.

2019 recorded a loss in growth momentum which is expected to return in 2020. The residential sector was a key market in previous years, however transport infrastructure, in particular the aviation sector, could be the biggest construction contributor through to 2023.

New Zealand, like Australia and other regions, is focusing on infrastructure construction to meet population growth and current demand. This will consist of services and utilities and transportation including roads. According to Stats New Zealand construction was the largest contributor to New Zealand’s GDP during mid 2019.