EUROCONSTRUCT

81st EUROCONSTRUCT Conference
10th June 2016, Dublin
PRESS RELEASE
OVERVIEW
It is estimated that GDP will grow by 1.9% per annum for the 19 Euroconstruct countries in the three
years 2016-2018, which is virtually unchanged from the December (Budapest) forecasts. The year
2016 will see the GDP of the 19 member countries grow by 1.8%, a forecast which is slightly below
the 2% projected in December 2015, while growth of 1.9% is foreseen for 2017. Notably, the year
2015 was the first time in eight years that all Euroconstruct countries recorded an increase in GDP, a
development which is expected to continue over the next three years.
Growth in total construction output for both 2014 and 2015 have been revised downwards from the
Budapest projections last December, as 2014 saw output increase by 1.1% (as opposed to 1.3%),
while 2015 saw growth of 1.4% (as opposed to 1.6%).
Overall construction output in 2016 is expected to improve by 2.6%, although this is below the
forecast outlined last December. An unchanged growth forecast of 2.7% is estimated for 2017,
followed by growth of 2.4% in 2018, which is an improvement on the forecast of 2% growth outlined
at the Budapest conference. The Central and Eastern European countries are expected to achieve
the greatest gains from 2015 onwards. Factors ranging from improving real household disposable
income, low interest rates, and the European Commission’s Investment Plan for Europe are
expected to contribute to the modest overall average growth in construction investment of 2.6% per
annum over the coming year in the Euroconstruct Area. Public finance constraints and public and
private debt levels will continue to act as a constraint on public and private investment.
The overall value of the construction industry itself it estimated to be €1.406 billion in 2016. This
equates to 9.4% of GDP and is significantly lower than the peak of 2007, where the industry
accounted for 13% of GDP.
Although the Euroconstruct market did stabilise in 2015, a diverse range of growth rates were
recorded across the 19 member countries during the year. Strong output growth rates were noted in
the Slovak Republic (+18.5%), the Netherlands (+7.8%) and the Czech Republic (+7.1%), while
countries such as Austria, France and Switzerland, contracted marginally in 2015.
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GDP vs Construction output in EC-countries (Year on Year change in %)
4%
4%
2%
2%
0%
0%
-2%
-2%
-4%
-4%
-6%
-6%
-8%
-8%
2012
2013
2014
GDP
2015
2016
2017
2018
Construction output
st
Source: Euroconstruct (81 conference).
PERFORMANCE OF THE MAIN SEGMENTS
Residential: Overall, the value of the residential market in the Euroconstruct area was €646 billion in
2015, with renovations accounting for 60% of the market. The most significant factor affecting the
Euroconstruct residential market is the inflow of refugees which has been increasing the pressure to
provide housing across the Euroconstruct area, especially in Germany and Norway. By end of 2016,
the level of housebuilding will have increased by 9.2% to 1.54 million dwellings since the lowest
point in the cycle (2013), with major contributions coming from Germany, the UK and Sweden.
Non-Residential: The volume of non-residential construction activity in Ireland is forecast to record
exceptional growth in 2016 and 2017 after a dearth of commercial building for several years. In
terms of prospects in the period 2016-2018, Hungary (+14% cumulative growth) and Spain (13.3%
cumulative growth) ranked a distant second and third place. EU funds in the period 2014-2020 will
strongly influence developments in Hungary while in Spain the sheer lack of capacity and the
requirement to address emerging supply gaps are expected to spur construction activity. Belgium,
the Netherlands and Finland are each expected to record around 10% cumulative growth in the
volume of output from non-residential projects. With 14 of the 19 countries each expected to record
a cumulative growth of 5% or higher in the 2016-2018 period, the overall outlook for the total nonresidential market is dragged down by Germany (18% of the total market), where the volume of
non-residential output is forecast to increase by just 1.5% in total over the same period.
Civil Engineering: The civil engineering sector would have suffered in a number of countries due to
austerity measures during the financial crisis. However after many years of contraction, civil
engineering output bottomed out in 2014 (+0.8%) and recorded a solid expansion in 2015 (+2.9%) to
reach €308 billion. The estimated outturn for 2016 is for a slowdown in the growth in output again
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(+1.5%), before rebounding in 2017 and 2018 to 3% and 3.8% respectively. A number of factors are
influencing the trajectory of civil engineering, including continued constraints on public investment
levels and strict budget deficit rules set by Brussels, pre-election surges in investment levels (Spain),
more pressing expenditure requirements arising from the refugee crisis (Germany), a lack of funding
at the level of local government and the municipality and slow and often delayed starts to existing
public funded programmes.
INDIVIDUAL COUNTRIES
The 2.6% increase in construction output for 2016 is equivalent to an increase of €36.5 billion. For
2016, the six largest construction markets1 are expected to contribute almost three-quarters of this
growth in the Euroconstruct market, highlighting their importance to the market. The smallest
contributions for growth in 2016 can be credited to the Slovak Republic, Hungary, Austria and the
Czech Republic, which between them only contribute 2.2% of the total increase of €36.5 billion for
2016. From a domestic point of view, Ireland’s construction industry is predicted to experience
exceptional cumulative growth of 42.5% in the next three years, albeit from an exceptionally low
base.
Biggest Contributors to Growth in 2016 (Year on Year change in %)
Contribution (% point) and % change in construction output
1
Germany, UK, France, Italy, Spain, Poland.
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Total Construction Output
(% change in real terms)
Forecasts
Country
Outlook
2012
2013
2014
2015
2016
2017
2018
Austria
2.5
-2.1
-1.0
-0.2
0.8
1.3
1.9
Belgium
1.0
-0.8
2.4
1.5
1.0
2.0
2.2
Denmark
-0.6
-0.2
2.1
1.9
1.8
2.7
3.2
Finland
-2.0
-3.2
-1.3
0.0
5.3
1.1
0.6
France
-3.1
-1.2
-6.0
-1.7
2.5
3.9
3.1
Germany
-0.6
-0.6
2.5
0.2
2.2
1.0
0.1
-14.1
2.5
9.2
4.8
14.4
16.0
7.4
Italy
-6.3
-3.5
-2.2
0.5
1.8
2.1
2.0
Netherlands
-9.6
-3.7
0.9
7.8
3.6
4.0
4.1
Norway
5.4
1.1
1.6
1.9
4.1
2.2
3.9
Portugal
-15.5
-14.5
-1.0
3.5
2.5
3.0
4.5
Spain
-31.4
-18.7
-1.7
2.9
3.7
4.0
3.5
Sweden
-2.5
1.1
6.2
5.2
4.5
1.8
0.2
Switzerland
2.8
3.0
3.0
-1.3
1.2
0.5
1.7
United Kingdom
-7.5
1.9
7.5
3.2
2.1
2.9
2.6
Western Europe (EC-15)
-6.4
-2.2
0.9
1.2
2.5
2.5
2.1
Czech Republic
-7.7
-7.0
4.1
7.1
1.9
2.4
3.3
Hungary
-2.9
5.3
8.3
2.9
1.1
7.0
6.9
Poland
-1.7
-5.8
5.1
4.2
5.8
7.2
8.7
-13.9
-4.1
-5.2
-4.8
-3.9
4.6
18.5
5.5
2.0
4.1
1.3
5.7
-1.5
6.7
-6.3
-2.4
1.1
1.4
2.6
2.7
2.4
Ireland
Slovak Republic
Eastern Europe (EC-4)
Euroconstruct Countries
(EC-19)
st
Source: Euroconstruct (81 conference).
For further information regarding the 81st Euroconstruct Conference and data please contact the
conference organisers and the Irish member of Euroconstruct:
DKM Economic Consultants
6 Grand Canal Wharf
South Dock Road
Dublin 4.
Tel +353 1 6670372
Email: [email protected]
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