GOOD PERSPECTIVES FOR THE EUROPEAN CONSTRUCTION INDUSTRY ACCORDING TO EUROCONSTRUCT
The summary of the Euroconstruct Report published last June points to an economic recovery in Europe, and therefore, outlines a quieter horizon for the European economy, despite the political uncertainty that still resists disappearing. According to the same report, Europe has already regained its mid-2008 level of employment, making domestic demand stronger in most countries, while low financing costs are helping to accelerate investment. However, the expected growth is only modest (1.7% annual average for 2017-2019), although it is higher than anticipated in the Euroconstruct report done six months ago. This improvement in the economic climate hasn’t gone unnoticed for the construction sector, which faces 2017 expecting a growth of 2.9%.
Residential projects, the key to the sector, but only in the medium term
While 2016 was a difficult year for the civil engineering segment and dragged to the negative area a total of 5 countries (Poland, Hungary, Czech Republic, Slovakia and Portugal), in 2017 civil engineering is going to grow again, and by countries only the Czech Republic is stagnant.
Expectations continue to be positive in the medium-term forecast, although a gradual deceleration is expected in 2018 (2.5%) and 2019 (2%), since new construction will be unable to prolong the substantial 2016-2017 pace of progress and the improvement in civil engineering will be insufficient to compensate that.
On the other hand, civil engineering was the only subsector unable to grow during 2016 (-1.8%) when several factors converged: on the one hand, the relapse between EU structural funds programs caused a notable decrease of production in the Eastern countries; on the other, Portugal and Spain had to sacrifice investment in an attempt to contain their deficit. The situation is clearly better in 2017, and although the fiscal problems in the peninsula are still weighing negatively, at least the EU flow funding to the Eastern countries has been restored smoothly. Production is projected to grow by 2% in 2017 and 3,6% in both 2018 and 2019. It should be noted that this new bonanza episode after the relapse of 2016 would be more based on transport infrastructure, unlike the 2013 -2015 period in which the leading role was for energy infrastructure.
Spain situation and forecasts, a two-speeded construction sector
In the construction sector, the exit from the crisis is proving more traumatic for the public sector than for the private sector. In 2016, while building markets grew 6.5% thanks to private demand, civil engineering suffered a 12% drop, causing the total production aggregate not to exceed a testimonial 1.8%. The public investment of 2016 suffered the long parenthesis of government in functions, but the real problem was the budgetary imbalance. A problem that still persists, despite the relief provided by economic growth, and which explains why the construction sector will advance only 3% in 2017, propelled solely by private promotion. If, as expected, public demand is just re-entering the market, it is reasonable to expect somewhat stronger growth in 2018 (4.1%) and 2019 (3.6%).