Construction activity to decelerate in Europe while Middle East and Africa rises from slump, says GlobalData

Construction activity growth in Europe is forecast to decelerate in 2020, while Growth in the Middle East and Africa region as a whole will steadily improve in 2020, following a contraction in 2018 and a relatively lackluster performance in 2019, says GlobalData, a leading data and analytics company.

The slowdown in construction growth in Europe, to 1.2% in 2020, will be driven by weakness in some key markets, which will offset a pick up across emerging markets in Eastern Europe. Danny Richards, Lead Economist at GlobalData, comments: “The recent general election in the UK has returned a strong government, thus reducing some of the uncertainty that had plagued the country in recent quarters. However, the risk that the Brexit process will create major economic disruption means that growth in construction activity will remain sluggish.

“In Germany, although the construction industry has been outperforming the overall economy, the gloomier outlook for the German economy means that construction will be dragged down. Nevertheless, ongoing efforts by the government to upgrade the country’s transport infrastructure on the back of the growing population and growth in the manufacturing, retail and tourism sectors will still provide support to the industry. Monetary policy within the EU will remain accommodative given subdued inflationary pressures and moderate levels of economic growth.”

Countries in the Gulf Cooperation Council (GCC) have suffered from weakness in oil prices in recent years, as government revenues have been greatly reduced.

Richards continued: “Assuming oil prices stay relatively high, large-scale investment in infrastructure projects – mostly related to transport – will be a key driving force behind the growth in the region. However, the construction booms in a number of markets have run their course.

“The pace of growth in sub-Saharan Africa will be particularly strong, at 6% in 2020. There will be a steady acceleration in construction activity in Nigeria, supported by government efforts to revitalize the economy by focusing on developing the country’s infrastructure. Ethiopia will be Africa’s star performer, with its construction industry continuing to improve in line with the country’s economic expansion, but the pace of expansion will ease back to single-digits.”

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