Global construction spending forecast lowered
By Helen Wright22 November 2011
Research company IHS Global Insight now expects total global construction spending to grow +4.9% in 2012, down from its previous forecast of +6.2%, after factoring in the impact of economic difficulties in the US and Eurozone.
"Concern over sovereign debt is expected to lead to a mild recession in the Eurozone, and the US economy continues to fail to gain significant traction," IHS warned, adding that the US economy is not expected to dip back into recession, but growth would remain "very weak".
Nevertheless, IHS said that the significance of these mature regions as export markets for the products of emerging economies would lead to slower growth worldwide.
According to the latest IHS Global Construction Outlook report, Spain, Portugal, Greece, Ireland and Italy are expected to see reduced construction spending as sovereign debt issues force austerity measures and discourage investment. The researchers said that Canada would also see declines in spending as a result of cutbacks after the 2012 elections.
Panama to lead growth
Offsetting this, IHS said Panama would be the 2013 construction spending growth leader, with growth of nearly +13% over 2011 levels forecast as expansion of the Panama Canal continues.
Japan and New Zealand are also forecast to see strong spending growth as reconstruction efforts in the wake of the earthquake damage in these countries drives spending.
Meanwhile, China's construction growth is forecast to moderate slightly next year, but IHS said the country would remain one of the fastest growth markets in 2012 due to the Chinese government's 12th five-year plan, which emphasises development of interior and western regions.
IHS also highlighted Saudi Arabia as a strong region in which increased investments in infrastructure and housing, coupled with higher oil prices, would drive spending next year.
In terms of sectors, IHS said global residential construction spending was expected to show +2.4% growth in 2011, followed by a +4.1% increase in 2012. Latin America's residential market shows the most promise in this sector, with a +5.8% increase expected this year and another +5.5% in 2012.
Spending growth in non-residential construction, meanwhile, is forecast to grow +2.6% in 2011 and +4.7% in 2012, driven by strong growth in the Asia Pacific region, which is forecast to see a +8.9% year-on-year increase in construction spending in 2012.
Global infrastructure spending is expected to increase +3% in 2011 and another +4.6% in 2012, driven again by emerging markets in Asia and South America - regions which are forecast to experience growth in infrastructure spending of +8.9% and +7.8%, respectively next year.
Looking ahead through to 2015, IHS said it expected global construction spending to increase at a compound annual growth rate of+4.7%, while the outlook beyond 2015 "calls for a return to moderately strong growth".