Construction growth slows across Europe

Following the +3.1% achieved in 2018, the European construction industry’s growth is expected to fall to around +1.9% this year and to +1.5% over the following two years.

The 87th Euroconstruct Conference (Rome, 12-13 June) painted a largely positive picture of the performance of the construction industry in Europe, with building production up by 3.1% to a value of 1.61 trillion euros. This latest increase was driven by the new construction segment, with 5% growth in the residential sector and a 6% upturn in civil engineering.

Although 2018 marked the fifth consecutive year of growth, the volumes are still well below the record levels of the pre-crisis period. Moreover, the 2018 results reveal the first signs of a slowdown with respect to the +4.2% achieved in 2017, the best figure since the beginning of the economic recovery. According to the forecasts, the slowdown will worsen during the three-year period 2019-2021 in parallel with the weakening of European economic growth. Following this year’s +1.9%, the European construction industry’s growth is expected to fall to around +1.5% over the following two years.

Within this overall picture, there is a high degree of variability between the individual Euroconstruct countries. In 2019, the biggest growth is expected in Hungary (+9.2%) and Poland (+8.9%), albeit well below the double-digit figures achieved in 2018. Remaining in Central and Eastern Europe, there will be sharp slowdowns in Slovakia (from +8% to +0.7%) and the Czech Republic (from +13% to +4%). The Scandinavian countries include the only two cases of negative growth, Sweden (-3.2%) and Finland (-1.9%), while growth has slowed in Denmark (+1.9%) and picked up again in Norway (+4.7%) following the slowdown of 2018. In Western Europe, the best performances this year (as in 2018) are expected in Ireland (+8%), Spain, Portugal and the Netherlands (around +5%). By contrast, growth in France, Germany, Switzerland and the UK will remain practically unchanged at 2018 levels of between +0.2% and +0.8%. Italy’s performance is in line with the average for the area as a whole. Following +2.2% growth in 2018, it is expected to close 2019 at +1.9% and maintain this growth rate over the two-year period 2020-2021.

In general, in the three-year period 2019-2021, the European construction industry will be driven more by the infrastructure sector (where activity is expected to grow by 3%) than the residential and commercial building segment, which is expected to see much slower growth (+1%).