China will push the U.S. into second place as the world’s biggest construction market before the end of the next decade, according to a new forecast of the next decade called Global Construction 2020 (CG2020).

Lagos, Nigeria
Will oil weath fuel growth in Nigeria’s main city, Lagos?
Photo: Global Construction

With its construction sector set to rise at an annual average of 6.3% for the next five years, the U.S. will be among the world’s top 12 fastest-growing markets. But it will lose its pre-eminent position, according to the forecast.

While CG2020’s predictions are presented to one decimal point of accuracy, one of the economists involved in the project, Rhys Herbert of Oxford Economics, cautions against believing the precision. He concedes that forecasters have lost some credibility since the 2008 crash, but insists that the report provides “rigor” in analyzing construction markets.

A potential user of the forecasts is Swiss-based cement maker Holcim Ltd., Zurich, one of CG2020’s four industrial sponsors. “We like to have outside expertise,” says the firm’s chief executive officer, Markus Akermann. “Otherwise you would have to build the data in-house and that’s very expensive.”

A single license to the entire report in PDF form can be purchased at for 295 pounds sterling. A printed version goes for 345 pounds.

Surprisingly, the fastest rising star that CG2020 identifies is Nigeria. The oil-rich West African state is on course to grow at an annual average of 9.9% until 2014 and 9% for the rest of the decade. India is close behind, set to grow annually by 9.2% over the next decade.

The construction sectors in Poland, Turkey and China will follow Nigeria and India closely in rate of expansion. They are all expected to expand faster than 8% a year on average.

China, as is now widely recognized, is the world’s looming economic giant. By 2020, nearly one fifth of global construction will in China, up from 13.7% now. The U.S. share is expected to fall fractionally to just under 17%, while India will rank joint third with Japan at 5.1%.

India’s rise from a 3.3% global share today reflects the growing construction might of emerging economies as mature markets decline in comparison, says CG2020. The global share of construction handled by today’s top 15 developed markets is set to shrink.

These are among findings in the first global projections to look forward as far ahead as a decade, says Graham Robinson, a principal of the consultant Global Construction Perspectives. “The whole industry has gone global, yet the amount of intelligence hasn’t caught up,” he claims.

To do the forecast, Robinson and his consultant Mike Betts, a veteran investment bank construction analyst, recruited the London-based consultant Oxford Economics (OE). They were attracted by OE’s large global macroeconomic model.

The economists have been working their model harder than ever since last year’s global crash. “Our forecast suggests we are now past the worst,” says OE’s managing director, Adrian Cooper. “We expect to see growth accelerating in the medium term.”

CG2020 forecasts global gross domestic product rising by an annual average of 3.5-4% in the next decade, after falling 2% this year.

Among developed countries, the U.S. is set for fastest annual average economic growth in the next decade, at 2.9%. CG2020 predicts the U.S. share of global GDP remaining roughly stable at 24%.

Growth rates in the other developed regions of Western Europe and Asia will be slower at around 2%.

At the same time, Brazil, Russia, India and China will see their combined share of GDP growing to 25% from 14.7% last year. China will lead, with its share set to more than double to over 15%.

As the global economy grows, construction will follow. After slowing down to an annual average global growth rate of 0.8% in the last five years, GC2020 forecasts an upsurge of over 5% to 2014 and 4.7% in the rest of the decade.

At 6-7%, growth in emerging markets will more than double that in developed regions. Developing economies are forecast to account for 55% of global construction in 2050, up from 35% in four years ago.

For 35 leading countries, the report provides key macroeconomic data from government and other sources plus snapshots of current infrastructure provision. It includes brief economic forecasts and associated general predictions for construction activity in the housing, non-residential and infrastructure sectors.

North America is forecast as the fastest growing developed region over the next 10 years. Following an annual average fall since 2005 of 5.3%, mainly since the crash, “we do expect a strong cyclical rebound,” says Betts. In the next five years “we are forecasting a growth of 6% per annum,” he adds. Growth will dip to around 3% for the rest of the decade.

Driving U.S. growth will be residential work, after shrinking from 70% of total construction to 51% over the last four years. Homebuilding is set to increase by an annual average of 9.8% to 2014, forecasts CG2020.

However, the forecasters expect non-residential U.S. orders to continue declining next year, before growing from 2011 more slowly than the housing market.

Because of state and federal deficits, GC2020 is “cautious on the longer-term outlook for infrastructure work.” It says infrastructure accounted for only 18% of U.S. construction last year, under half the corresponding Canadian figure.

Asia Pacific’s emerging economies will experience the world’s fastest construction growth in the next decade, averaging 7.7% a year, says CG2020. That would be 2.8% greater than the global growth forecast, though marginally less than the region’s performance since 2005.

China will remain dominant. Its infrastructure sector is expected to grow fastest over the decade, boosted initially by economic stimulus. Around 12 months ago, the government launched a two year $585 billion package, with 85% aimed at infrastructure, records CG2020.

The residential sector, accounting for 57% of the country’s total construction output last year, will be China’s largest but slowest growing market.

Of Asia Pacific’s two developed markets, Japan is set for low construction growth, averaging 0.8% a year till 2020. And that will follow four years of decline, says CG2020.

Australia, however, is set to grow by 4.3% over the period across all the main sectors. Residential work will rise fastest initially, with infrastructure work moving ahead from, 2014.

Despites a forecast 7% a year GDP rise, CG2020 expects construction growth in South and Central America to be slower than in other emerging regions. It is forecast to grow 6.1% a year on average till 2014 and by 4.1% in the next five years.

Construction in Brazil and Mexico is forecast to grow in the next five years and decelerate in 2014-20. The reverse trend is forecast for Argentina and Colombia.

After the current construction decline, CG2020 forecast demand in the Emirates to grow by 5-7% a year on average between 2011 and 2020. It forecasts 5.5% annual construction growth in Saudi Arabia in the five years to 2020, with infrastructure growing more slowly than building.

In Western Europe, CG202 forecasts construction declines during 2008-2010 in Italy, the U.K. and Spain of 10%, 14% and 20%. Spain won’t rebound until 2014, but the other major regional countries are set to grow by 1.4% average a year in 2009-2014, rising to 2% till 2020. Growth will be slow in France and Italy and fastest in Greece.

Construction in Eastern Europe is set to rise 6.7% a year on average in the next 10 years and by 7% in Russia.