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Construction Outlook
Global Construction Outlook: Prospects in 2022
GlobalData’s webinar shines the spotlight on the construction industry. Matthew Hayhoe reports.
DANNY RICHARDS, lead economist for GlobalData construction, analysed the worldwide construction landscape during the Global Construction Outlook webinar in January 2022.
On the global playing field for the construction industry, Richards explained, “The global economy is still recovering from the Covid19 crisis. The crisis continues to propose major downside risks to growth momentum. Notably, the potential for ongoing renewed Covid19 restrictions will disrupt economic activity, alongside supply disruptions, high inflation and increased debt. In major markets, we are closer to a return to normal.” Richards continued, “Looking further afield across the Middle East and North Africa, infrastructure is clearly driving much of the growth.”
Richards elaborated that the rebound of oil and gas prices and reopening of economies following Covid19 lockdowns was a key player in supporting the growth. “The rebounding oil and gas prices and the opening of economies (lifting Covid19 restrictions) has done much to support the construction industry.
Significant government spending, particularly on infrastructure, has supported the recovery in the construction sector across Western Europe.
In the region, Saudi Arabia was one of few markets that managed to grow in 2020 according to the latest data,” he added. According to GlobalData, Saudi Arabia’s construction industry estimated to have expanded by 1.5% in 2021, following a revised growth of 1.9% in 2020.
In looking ahead to continuing and capitalising on this growth, Richards explained, “This will continue to edge upwards, supported by government investment. The government is focusing on infrastructure and utilities projects as it seeks to diversify its economy away from oil.
“We expect the UAE to grow relatively well, but it won’t be anywhere near 2019 levels until 2023. Expo 2020, has provided some positive support for the economy’s recovery, but we’re seeing some problems for major contractors and subcontractors in the region. This reflects the continuing pressure on the overall construction sector, with a contagion effect spreading across many subcontractors.”
One major talking point within the construction industry and energybased infrastructure is the rising energy prices.
Richards elaborated, “One thing we’ve been looking at is the impact on construction material, so the key challenge in terms of materials is material prices. These have come from supply disruptions and the surge in demand.
“There will be upward pressure on key material prices when it comes to production costs, stemming from higher energy prices in the coming quarter (Q2 2022).”
“Although there may be improvements on the supplyanddemand side, that would normally allow for construction material prices to come down somewhat, there’s going to be renewed pressure on production costs, stemming from higher energy prices.”
The GlobalData webinar mentioned that construction in sub Saharan Africa continues to recover but limited fiscal space and soaring debt levels are likely to impact the industry in 2022. ■
Rising energy prices is a major talking point within the construction industry and energy‐based infrastructure.
