A new, Global Construction 2025, from Global Construction Perspectives and Oxford Economics shows that developing countries will drive construction growth over the long-term. This is true of different regions of the world, while key countries such as Qatar and Nigeria will be among the fastest growing.
Speaking at the launch of the report Bruno Lafont, Chairman & CEO, Lafarge, which is one of Global Construction 2025’s sponsors said, “Construction will account for 13.5% of global output by 2025, according to the report. To talk about construction is to talk about growth.”
He added, “Over 66% of global construction activity will be undertaking in emerging markets by 2025.”
Mr Lafont said key drivers such as urbanisation and high demand for infrastructure and housing in the early stages of countries’ development would see global construction growth out-strip GDP growth for the foreseeable future. “Urbanisation, driven by economic expansion is one of the biggest challenges we see. Every day an area as big as Paris – 110 km2 – is urbanised,” he said.
Although emerging markets are expected to lead the way, the report’s authors cautioned that growth would be more measured than in the past.
Jeremy Leonard of Global Construction Perspectives & Oxford Economics said of the broad economic picture, “Emerging markets will continue to grow significantly more rapidly than the developed world, but that growth will be at a slightly less robust pace than in the past. We’ve seen a change in some of the drivers in some of the emerging markets.”
He highlighted the move in China towards a more consumer-driven economy and the slow pace of reform in Brazil and India as examples of this.
“People who expect China to grow by 10%, as it has done for the last decade, are going to be disappointed. Growth is going to be nearer 7%,” he said.
While emerging markets are expected to see robust growth, the report’s authors were down-beat on the prospects for some key developed markets. “We can’t expect much more than 2% growth over the next decade or so,” said Mr Leonard. “We tend to talk about Europe as a lost decade of growth. Even when we get out of the current cyclical downturn, we only see about 1.8% growth in 2015 – 2020” he added.
And despite the current growth in the Japanese economy, which Mr Leonard put down to the ‘Abenomics’ stimulus measures that he said may break the country’s deflationary spiral, the long term prospects are less bright. “Japan is a country with a declining population and it is facing competition from its neighbours in the region,” he said.
Overall, global construction output is expected to grow at +4.3% a year over the next 12 years, compared to +3.5% for GDP growth. Western European construction is expected to under-perform, with an annual average of just +1.0%, the same rate as the developed countries of Asia-Pacific. Latin America is also expected to be below trend with +3.5% annual construction growth.
North American markets are expected to be more or less on the global trend at +4.2% annual growth, while Eastern Europe (+4.6%) and the Middle East and North Africa (+4.9%) are expected to be ahead of the curve. The most robust growth is expected to be in sub-Saharan Africa (+5.0%) and emerging Asia-pacific (+6.9%).
Of 46 key countries surveyed, Qatar is expected to enjoy the fastest growing construction market at an average annual rate of +10%