In 2024, the volume of construction will recover to 0.7%

In the current year, the volume of construction in the EU will decrease by a moderate 0.5% and will recover to +0.7% in 2024. This is stated in the report of the European Steel Association (EUROFER) «Economic and Steel Market Outlook 2023-2024/Q3».

In 2022, the volume of production in the construction sector of the EU increased by 4.9%, combining positive changes in the first half of the year and a significant slowdown in the second half of the year.

In the first quarter of 2023, the volume of construction in the European Union increased by only 0.1%, although weak construction activity in this period is an annual seasonal trend, especially in the construction of engineering structures. However, this trend is expected to worsen in the next three quarters due to the impact of rising prices for building materials, a shortage of builders and the impact on housing demand of continued monetary policy tightening.

While overall construction activity will continue to be supported, albeit at a fairly low pace, by government housing and civil construction support schemes, this impact will weaken significantly in 2023.

The expected increase in interest rates in the EU will affect the demand for residential construction. At the same time, the construction of engineering structures will continue to make the largest contribution to the productivity of the construction sector. This segment will continue to be supported by pan-European public policy, but its impact is difficult to calculate due to the recent deterioration in the economic outlook. The suspension of the Stability and Growth Pact has been extended until the end of 2023, leaving room for public spending on infrastructure. However, visible results in terms of construction volumes associated with these projects will be delayed over time.

The restrained business investment outlook remains unfavorable for investments in private non-residential construction (offices, commercial buildings, etc.) in the near future.

As GMK Center reported earlier,in the review for the second quarter of EUROFER predicted, that in the current year the volume of construction in the EU will decrease by 1.6% and will recover to 1.3% in 2024.