Construction Spending Hits New Global Low
Tough economic times around the world are taking a toll on global construction spending. Back-to-back annual declines have been reported for the first time in two decades, according to results of an annual survey of 69 construction markets. In its 2009 global construction outlook, IHS Global Insight Construction Services, Lexington, Mass., projects a 3.7% decline in total global spending this year, to $5.6 trillion. This dip would come on top of a 1.2% drop in 2008. The combined figures represent “the steepest decline in global construction spending in at least 20 years,” says Scott Hazelton, the research firm’s director of construction services. “Contractions in world construction activity are unusual but are occurring because of the [concurrent] downturn in national economies around the globe.”
Hazelton notes spending declines everywhere except in Asia, with that region projecting just 2.6% growth, down from 8.4% in 2006 (see chart). China’s 2009 construction market is the largest of those tracked, at $701 billion. IHS predicts a slight decline in growth through 2013.
Projected declines are particularly steep in North America and western Europe. Construction spending in North America is set to fall 11.4% this year to $1.04 trillion, its lowest since 2001. Western Europe’s 6% spending decline to $1.8 trillion is that region’s lowest level in five years, according to the report.
IHS sees some good news from infrastructure-heavy government stimulus packages in some global construction economies. It says China is pumping $350 million into its construction marketplace, while Germany has earmarked $24 billion and South Korea $10 billion. The research firm predicts 5% growth for global infrastructure spending this year.
Looking ahead, IHS predicts a “modest recovery in 2010 and a stronger rebound in 2011,” says Hazelton.
He forecasts 7.1% annual compound growth through 2013 for construction in Asian nations, except Japan. “While 2010 will be weak, Asian dynamism and North American resilience will return to lead global construction growth near or above 5% for 2011 and 2012,” he adds.
| (Actual growth rates in black; projected in red) | |||||||
|---|---|---|---|---|---|---|---|
| Year | World | North America | South America | Western Europe | Eastern Europe | Middle East & Africa | Asia |
| 2000 | 3.3% | 5.5% | -0.6% | 4.9% | 8.5% | 1.6% | -0.5% |
| 2001 | 2.8% | 2.2% | 0.3% | 2.5% | 8.7% | 13.6% | 2.2% |
| 2002 | 2.1% | 1.2% | -3.0% | 2.8% | -10.3% | 5.6% | 3.9% |
| 2003 | 4.0% | 3.0% | -6.7% | 2.8% | 9.0% | 6.3% | 6.5% |
| 2004 | 6.0% | 8.4% | 12.3% | 3.4% | 4.3% | 1.8% | 7.4% |
| 2005 | 6.6% | 7.5% | 10.1% | 5.9% | 7.2% | 2.2% | 6.7% |
| 2006 | 7.2% | 3.8% | 11.0% | 7.2% | 15.4% | 9.3% | 8.4% |
| 2007 | 2.9% | -4.1% | 8.5% | 2.0% | 13.4% | 10.2% | 6.5% |
| 2008 | -1.2% | -6.4% | 4.8% | -5.2% | 8.0% | 7.2% | 3.9% |
| 2009 | -3.7% | -11.4% | -0.6% | -5.9% | -3.2% | -1.2% | 2.6% |
| Source: IHS Global Insight Construction Services | |||||||
