Civil engineering drives industry, as economic conditions slows growth in residential construction
We expect global construction output to increase by 3.2% in 2023. While this may seem promising, growth in advanced economies will be very slow (up just 0.3% on last year). What growth there is will come from emerging markets (up 5.8%).
In addition to regional differences, there is a gap between residential and commercial projects. Residential construction is forecast to grow only by 1.1% in 2023 and 0.6% in 2024, with many advanced economies recording contractions this year. High interest and mortgage rates, along with high inflation, are squeezing household budgets and reducing demand. Materials and labour costs remain high in many economies, which has led to pressure on margins and reluctance to commit to building projects.
However, we expect non-residential output to increase 5% in 2023 and 1.7% in 2024. Civil engineering output is forecast to grow 5.6% this year and 3.6% in 2024. Governments worldwide continue to champion major infrastructure projects to boost their economy’s productive potential.