Construction volumes in the EU will decrease by 0.4% y/y in 2024 – EUROFER

EUROFER, the European steel association, predicts a 0.4% decline in EU construction in 2024 compared to 2023, when there was a 2.1% y/y decline (previous expectations). However, a positive growth trend of 2% y/y is expected next year. This is stated in the EUROFER Economic and steel market outlook 2024-2025, first quarter.

«Rising prices for construction materials, coupled with labor shortages in some EU countries, rising economic uncertainty and rising interest rates, have affected construction volumes in the EU. This negative trend is expected to continue until the first half of 2024, mainly due to the impact of further monetary policy tightening amid higher mortgage rates and weak demand for housing,» the report said.

In 2023, housing construction experienced a decline due to the tightening of monetary policy by the European Central Bank (ECB) to curb inflation. However, a more positive trend was observed in civil engineering, which proved to be resilient in these conditions, but still could not compensate for the decline in residential construction.

According to EUROFER’s forecasts, in 2024, civil construction will continue to grow, but at a slower pace due to reduced public spending.

«Governments are using state construction programs as one of the measures to support the industry after the 2020 recession caused by the COVID-19 pandemic. However, in 2024, the impact of these programs will be significantly reduced due to a number of negative factors, such as a shortage of building materials, their rise in price and reduced financial opportunities for construction in the EU,» the association notes.

As for the segment of private non-residential construction (offices, commercial buildings, etc.), the depressed investment prospects for the business remain unfavorable in the near future due to instability in the business environment.

As GMK Center reported earlier, according to EUROFER forecasts, apparent steel consumption in the European Union is expected to decline by 6.3% in 2023 compared to 2022, to 129 million tons. At the same time, in 2022, the figure decreased by 6.5% y/y, and in 2024 it is expected to grow by 5.6% y/y.