Global Construction Outlook to 2023 - Q3 2019 Update

Global Construction Outlook to 2023 - Q3 2019 Update

Summary

This report provides a detailed analysis of the prospects for the global construction industry up to 2023.

GlobalData has revised downwards its forecast for global construction output growth in 2019 to 2.7%, which will be the slowest pace of growth in a decade. The deterioration in construction output growth across emerging markets has been worse than previously expected, particularly in the Middle East, while some major advanced economies have struggled to generate growth momentum, including the US, the UK and Australia.

In China, where the authorities are stepping up investment in infrastructure to prevent a continued slowdown, growth will remain positive, contributing to a slight acceleration in growth in total output in the emerging markets. GlobalData’s central forecast is for global construction output growth to edge up to 3.2% in 2020 and then to stabilize at 3.4% over the remainder of the forecast period, which runs to 2023. This is in part driven by a projected improvement in the global economy in 2020, which in turn relies improvements in financial market sentiment and a stabilization in some of the large currently-troubled emerging markets.

However, geopolitical risks are intensifying, and could potentially undermine investor confidence and disrupt capital flows in the early part of the forecast period. Risks to the overall forecast stem primarily from a possible escalation in the trade war between the US and China, and also inflamed tensions between the US and Iran following the recent drone strikes on Saudi Arabia’s largest oil processing center, which have been blamed on Iran.

There is also a risk that China could overstep its efforts to support the economy, resulting in an unmanageable debt crisis, which would disrupt investment trends globally, most notably via the impact on demand in commodities markets. There are also other major emerging markets facing domestic political and economic stresses that could erupt into full-blown crises, creating a risk of contagion across these markets.

Key Highlights

The pace of growth in North America’s construction industry is expected to remain weak in 2019-2020, averaging 0.4%, before regaining momentum over the remainder of the forecast period as ongoing investments in infrastructure development will provide support for the region’s construction industry. Construction in the US has been particularly weak so far in 2019 owing to a dismal performance in the residential buildings sector. Activity in Latin America has also been very weak, and GlobalData now expects the region’s construction output to contract by 0.2% owing to particularly poor performances in Argentina, Brazil and Mexico. There will be a recovery in Latin America in 2020, but the region’s construction industry will continue to be subject to downside risks, with investor sentiment undermined by policy uncertainty and economic fragility.

The Asia-Pacific region will continue to account for the largest share of the global construction industry, given that it includes the large markets of China, Japan and India. The pace of growth over the forecast period will average 4.3%, which is down from the 5.2% in the past five years. Although there will be an acceleration in growth in China in 2019, the general trend is one of slowing growth given the need for China’s government to try to curb excessive investment and avoid a disorderly debt crisis.

Moreover, reflecting recent years of overinvestment in residential construction and the resulting glut of new residential properties, building construction output growth will also decelerate. There will also be weakness in South Korea, which is experiencing a sharp contraction in construction works. In India, positive developments in economic conditions, improvement in investor confidence and investments in transport infrastructure, energy and housing projects have helped the construction industry regain growth momentum. The emerging markets of South-East Asia will invest heavily in new infrastructure projects, supported by private investment, and this region will be the fastest growing, expanding by 6.4% in 2019-2023. Australia’s construction industry has plummeted, and GlobalData now expects a 6.3% fall in 2019, in line with the sharp contraction in buildings work and a slower than expected rebound in infrastructure.

Construction activity growth in Western Europe is forecast to decelerate in 2019 and 2020. Reflecting the intensifying uncertainty in the UK over the Brexit process, and the likelihood of a sub-optimal outcome in terms of disruption to the economy, GlobalData has adjusted downwards its forecast for construction growth in the UK. In Germany, although the construction industry has been outperforming the overall economy, the gloomier outlook for the German economy means that construction will be dragged down. Nevertheless, ongoing efforts by the government to upgrade the country’s transport infrastructure on the back of the growing population and growth in the manufacturing, retail and tourism sectors will still provide support to the industry. Monetary policy within the EU will remain accommodating for much of the forecast period, given subdued inflationary pressures and moderate levels of economic growth.

Construction activity across Eastern Europe expanded at a rapid pace in 2018, primarily reflecting recovery in a number of markets, as EU funding was restarted after a hold-up in 2016. There will be a return to more normal rates of growth from 2019, but construction in Turkey is set to suffer from the effects of instability in the economy, with higher interest rates and rising risk premiums undermining the outlook for economic growth. In Russia, construction grew sharply in 2018, but it has remained fairly flat so far in 2019. However, investment in residential and infrastructure projects in addition to a recovery in the oil and gas sector will support a recovery in Russia’s construction output.

Growth in the Middle East and Africa region as a whole will steadily improve over the forecast period, following a contraction in 2018 and a relatively lackluster performance in 2019. Countries in the Gulf Cooperation Council (GCC) have suffered from weakness in oil prices in recent years, as government revenues have been greatly reduced. Assuming oil prices stay relatively high, large-scale investment in infrastructure projects - mostly related to transport - will be a key driving force behind the growth in the region. However, the construction booms in a number of markets, notably Qatar, appear to have run their course. The pace of growth in sub-Saharan Africa will be particularly strong, averaging 6.0% a year in 2019-2023. There will be a steady acceleration in construction activity in Nigeria, supported by government efforts to revitalize the economy by focusing on developing the country’s infrastructure. Ethiopia will be Africa’s star performer, with its construction industry continuing to improve in line with the country’s economic expansion, but the pace of expansion will ease back to single-digits.

Scope

  • An overview of the outlook for the global construction industry to 2023
  • Analysis of the outlook for the construction industry in major global regions: North America, Latin America, Western Europe, Eastern Europe, South and South-East Asia, North-East Asia, Australasia, the Middle East and North Africa, and Sub-Saharan Africa.
  • A comprehensive benchmarking of 92 leading construction markets according to construction market value and growth
  • Analysis of the latest data on construction output trends in key markets.
Reasons to buy
  • Evaluate regional construction trends from insight on output values and forecast data to 2023. Identify the fastest growers to enable assessment and targeting of commercial opportunities in the markets best suited to strategic focus.
  • Identify the drivers in the global construction market and consider growth in emerging and developed economies. Formulate plans on where and how to engage with the market while minimizing any negative impact on revenues.


  • Global Outlook
    • Table Global Construction Output Growth (Real, % change), 2018-2023
    • Table Figure 1: Global Construction Output Growth (Real, % change), 2014-2023
    • Table Figure 2: Global Construction Output Growth (Real, average % change), 2014-2018 and 2019-2023
    • Table Figure 3: Global Construction Output Growth (Real, average % change), 2019-2023
    • Table Figure 4: Global Construction Output Value (Real, 2017 US$ billion), 2018 and 2023
    • Table US and Canada, Construction Output Value (Real, US$ 2017 billion), 2014-2023
    • Table Latin America, Construction Output Value (Real, US$ 2017 billion), 2014-2023
    • Table Western Europe, Construction Output Value (Real, US$ 2017 billion), 2014-2023
    • Table Eastern Europe and Central Asia, Construction Output Value (Real, US$ 2017 billion), 2014-2023
    • Table South and South-East Asia, Construction Output Value (Real, US$ 2017 billion), 2014-2023
    • Table North-East Asia, Construction Output Value (Real, US$ 2017 billion), 2014-2023
    • Table Australasia, Construction Output Value (Real, US$ 2017 billion), 2014-2023
    • Table Middle East and North Africa, Construction Output Value (Real, US$ 2017 billion), 2014-2023
    • Table Sub-Saharan Africa, Construction Output Value (Real, US$ 2017 billion), 2014-2023
  • Regional Outlook: US and Canada
    • Overview
      • Table Figure 5: US and Canada, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table US and Canada, Construction Output Growth (Real, % change)
      • Table Figure 6: US and Canada, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 7: US and Canada, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 8: US, Value of Construction Put in Place Seasonally Adjusted (US$ million)
      • Table Figure 9: Canada, Construction value-add (% change year on year, constant prices)
  • Regional Outlook: Latin America
    • Overview
      • Table Figure 10: Latin America, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table Latin America, Construction Output Growth (Real, % change)
      • Table Figure 11: Latin America, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 12: Latin America, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 13: Argentina, Synthetic Indicator of Construction Activity
      • Table Figure 14: Mexico , Construction value-add (constant 2013 prices, % change, year on year)
      • Table Figure 15: Brazil, Construction value-add (BRL million, chained at 1995 prices)
      • Table Figure 16: Colombia, Construction value-add (COP, chained at 2015 prices, % change, year on year)
      • Table Figure 17: Chile, Construction value-add (CLP billion, chained at 2013 prices)
      • Table Figure 18: Peru, Construction value-add (PEN million, constant 2007 prices)
  • Regional Outlook: Western Europe
    • Overview
      • Table Figure 19: Western Europe, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table Western Europe, Construction Output Growth (Real, % change)
      • Table Figure 20: Western Europe, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 21: Western Europe, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 22: Germany, Construction Value Add (EUR Million, 2010 chained prices)
      • Table Figure 23: UK, Construction Output (% change, year on year)
      • Table Figure 24: Greece, Construction Production Index (% change, year on year)
      • Table Figure 25: Sweden, Construction Production Index (% change, year on year)
      • Table Figure 26: Ireland, Planning Permissions Granted for Construction
      • Table Figure 27: France, Construction Production Index (% change, year on year)
  • Regional Outlook: Eastern Europe and Central Asia
    • Overview
      • Table Figure 28: Eastern Europe, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table Eastern Europe, Construction Output Growth (Real, % change)
      • Table Figure 29: Eastern Europe, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 30: Eastern Europe, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 31: Russia, Construction Value-Add (% change, year on year)
      • Table Figure 32: Poland, Construction Production Index (% change, year on year)
      • Table Figure 33: Turkey, Construction Value-Add (Constant Prices)
      • Table Figure 34: Hungary, Construction Production Index (% change, year on year)
      • Table Figure 35: Czech Republic, Construction Production Index (% change, year on year)
  • Regional Outlook: South and South-East Asia
    • Overview
      • Table Figure 36: South and South-East Asia, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table South and South-East Asia, Construction Output Growth (Real, % change)
      • Table Figure 37: South and South-East Asia, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 38: South and South-East Asia, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 39: India, Construction Value-Add (INR Billion, Constant Prices)
      • Table Figure 40: Singapore, Construction Value-Add (Constant Prices)
      • Table Figure 41: Indonesia, Construction Value-Add (IDR Billion, Constant Prices)
      • Table Figure 42: Thailand, Construction Value-Add (Constant Prices)
      • Table Figure 43: The Philippines, Construction Value-Add (PHP Billion, Constant Prices)
      • Table Figure 44: Malaysia, Construction Put in Place (MYR Million, Current Prices)
  • Regional Outlook: Australasia
    • Overview
      • Table Figure 45: Australasia, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table Australasia, Construction Output Growth (Real, % change)
      • Table Figure 46: Australasia, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 47: Australasia, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 48:Australia, Construction Work Done (Chained volume measure, AUD million)
      • Table Figure 49:Australia, Dwelling Units Approvals (Number of units)
      • Table Figure 50:New Zealand, Building Work Put in Place (Chained volume measure, NZD million)
  • Regional Outlook: North-East Asia
    • Overview
      • Table Figure 51: North-East Asia, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table North-East Asia, Construction Output Growth (Real, % change)
      • Table Figure 52: North-East Asia, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 53: North-East Asia, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 54: South Korea, Construction Value-Add (% change, year on year)
      • Table Figure 55: Japan, Construction Contracts, Order Values (JPY trillion, 3-month moving average)
      • Table Figure 56: China, Construction Value-Add (Constant prices)
      • Table Figure 57: Hong Kong, Gross Value of Construction Works (HKD Million, Constant prices)
  • Regional Outlook: Middle East and North Africa
    • Overview
      • Table Figure 58: Middle East and North Africa, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table Middle East and North Africa, Construction Output Growth (Real, % change)
      • Table Figure 59:Middle East and North Africa, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 60: Middle East and Africa, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 61: Israel - Construction Value-Add (NIS million, Constant Prices)
      • Table Figure 62: Qatar, Construction Value-Add (QAR million, Constant Prices)
      • Table Figure 63: Saudi Arabia- Construction Value-Add (SAR million, Constant Prices)
      • Table Figure 64: Bahrain, Construction Value-Add (BHD million, Constant Prices)
      • Table Figure 65: Egypt, Construction Value-Add (EGP million, Constant Prices)
      • Table Figure 66: Oman, Construction Value-Add (OMR million, Constant Prices)
      • Table Figure 67: Tunisia, Construction Value-Add (TND million, Constant Prices)
      • Table Figure 68: Algeria, Construction Value-Add (DZD million, Current Prices)
      • Table Figure 69: Morocco, Construction Value (MAD million, Chained Prices)
      • Table Figure 70: Kuwait, Construction Value Add (KWD million, Constant Prices)
  • Regional Outlook: Sub-Saharan Africa
    • Overview
      • Table Figure 71: Sub-Saharan Africa, Construction Output Growth (Real, average % change), 2014-2018 vs 2019-2023
      • Table Sub-Saharan Africa, Construction Output Growth (Real, % change)
      • Table Figure 72: Sub-Saharan Africa, Construction Output Growth (Real, average % change), 2019-2023
      • Table Figure 73: Sub-Saharan Africa, Construction Output Value (Real, US$ 2017 billion)
    • Key Updates
      • Table Figure 74: Nigeria, Construction Value-Add (NGN million, Constant Prices)
      • Table Figure 75: South Africa, Construction Value-Add (ZAR million, Constant Prices Seasonally Adjusted)
      • Table Figure 76: Cameroon, Construction Value-Add (CFA billion, Constant Prices)
      • Table Figure 77: Ghana, Construction Value Add (GHS million, Constant Prices)
      • Table Figure 78: Tanzania, Construction Value-Add (TZS billion, Constant Prices)
      • Table Figure 79: Zambia, Construction Value-Add (ZMK million, Constant Prices)
      • Table Figure 80: Kenya, Construction Value-Add (KSH million, Constant Prices)
  • About GlobalData
    • GlobalData at a Glance
      • Table Figure 81: GlobalData at a Glance
    • GlobalData Construction
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