EU construction industry output is expected to rebound 5.5% on-year in 2021 and then by a further 4.5% in 2022. Automotive output is meanwhile seen rebounding 15.3% from a very low base in 2021, followed by 7.9% growth in 2022, says European steelmakers’ association Eurofer.
Following Covid-19-lockdown-induced residential construction activity stoppages in 2020, conditions in 2021-2022 will remain only marginally supportive due to only slight improvements in economic conditions and incomes, Eurofer says in a report sent to Kallanish. “There is already a widespread dichotomy between the upper-segment housing market, which is boosted by higher demand of better homes due to tele-working, and the lower-income segment,” the association comments.
“Civil engineering is expected to be an important growth area for the construction sector as governments invest in infrastructure as a counter-cyclical tool to boost economic performance,” Eurofer continues. “This segment will also be supported by EU-wide public policies (Next Gen EU, etc) whose effects, however, will be seen only to a limited extent during 2021.”
In the automotive sector, general economic uncertainty across the EU during the ongoing pandemic and subdued consumer confidence, due to poor disposable income developments, have continued to impact car demand. The recovery in EU production remains somewhat fragile and exposed to uncertainty factors.
If normal business conditions resume from the second half of 2021, it will take time for activity to return to pre-2019-downturn levels. Demand remains the biggest challenge, as consumers are likely to remain discouraged until the macroeconomic picture and consumer disposable income substantially improve, Eurofer observes.
“In 2021, provided that the industry has been able to restore its production to normal levels, and with WLTP distortions having faded out by then, the launch of new models – many of them hybrid or fully electric vehicles – could be a supportive factor, combined with some improvement in real wages and labour market dynamics on the demand side,” Eurofer comments. “Full recovery in global trade and external demand from major markets such as the US, China and Turkey will remain a key factor for EU car exporters.”
Adam Smith Germany