European construction industry federation FIEC confirms in its latest outlook for investments that 2023 will be a year of contraction, after two consecutive years of growth.
According to the federation, in 2023 overall investments in construction in Europe will decline 2.5% year-on-year, following a recovery of 2.1% y-o-y in 2022 and a jump of 4.8% y-o-y in 2021. Since 2014, construction investments have dropped on-year only once, in 2020, due to the impact of Covid. They fell 3% on-year in 2020.
Sweden will be the market with the largest contraction (-13.7% y-o-y), but all major economies will see investments decelerate compared with 2022. Portugal (+3.4% y-o-y) and Ireland (+2.5% y-o-y) are the only countries expected to see investments increase this year, Kallanish notes.
Overall civil engineering investments in Europe this year should grow 2.2% y-o-y, but both residential and non-residential buildings will contract.
In its latest report, FIEC explains that uncertainties already hit the sector last year, but the full negative impact will only be seen during 2023. “Rising prices and supply shortages for energy and certain construction materials have negatively impacted several contractors in Europe, with many at risk of not being able to fulfil contractual obligations or refraining from participating in public tenders. Overall, the construction sector registered slightly weaker growth than forecasted last year. In 2023, investment in construction is expected to decline at a rate of 2.5%,” the association explains.
FIEC’s outlook is in line with the latest Eurofer view on the construction sector. Output in the construction sector steadily increased in 2022 – by 4.8%, after a buoyant 6.7% growth in 2021 – thanks to EU and national supporting schemes, Eurofer explained referring to construction output, rather than investment.
However, increasing shortages combined with higher prices of construction materials, together with lower residential construction demand due to monetary tightening and higher mortgage rates, are expected to see a 1.6% drop in 2023. A moderate recovery of 1.3% is foreseen in 2024, Eurofer concluded.
Emanuele Norsa Italy