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Global Construction Industry Expected to Reach $10 trillion by 2020
The world's construction industry is slowly beginning to have a fast rate of growth. This is after it survived a period of decline in growth brought by a crisis in the global financial sector. A research done by CIC puts the actual monetary output of this sector at US $ 8.5 trillion in 2015 against a lower value of US $ 7.5 back in the year 2011.
There is a prediction of a 3.4% annual growth in the sector over a period running between 2016 to 2020(forecast period) with a total value of US $ 20 trillion expected in the year 2020.
It is predicted that the construction industry in the world's emerging economies are going to have a higher growth as compared to those in the advanced economies. However, the annual rate of growth in these emerging economies is approximated at 4.2%. This is lower when compared to the annual rate of 5.2% between 2010 to 2015(review period). By 2020, the emerging economies are expected to contribute 51.9% of the value of this sector up from 43.9% in the year 2010.
Over the forecast period, the advanced economies are also expected to contribute massively to this sector. The prediction puts the annual rate of growth at 2.5% during the period of the forecast as compared to the 0.1% annual growth rate during the period under review.
The biggest value in the global construction industry is expected to be contributed by the Asia-pacific region. This value will be as a result of the fact that this region is made up of large economies of Japan, India and China. The annual rate of growth will, however, be low as a result of the slow growth in China. With the assistance of private investment which will mainly concentrate on new projects, there will be massive growth in the rising economies of South East of Asia.
Though the Industries located in the Western Europe are recovering, there output will be way below what they contributed in the period before the financial crisis. The problems within the Euro-zone coupled with the crisis between Russia and Ukraine have gone a long way in reducing the level of confidence of potential investors in this region.The strict government policies and deterioration of level of confidence of the investors will also result in low growth in Germany.The growth of the construction industry in Africa and the Middle East will be as a result of the efforts aimed at improving the transport infrastructure in these regions. as reported by steelbuildingsdirect.co.uk, owing to the huge investment in infrastructure projects in Qatar, the country is expected to have a construction industry with the fastest rate of growth within the period of forecast. However, given that the country is heavily dependent on money obtained from the petroleum sector, a fall in the global price of oil may reduce the ability of the government to finance its projects.
In comparison to the other emerging economies, the rate of growth of the construction industry in Latin America is expected to be slower. This is mainly caused by contraction of the Brazilian economy. With the unpredictable economic situation in Argentina, investors will still have less confidence. There will still be trouble in Venezuela too. Mexico, on the other hand, is undergoing a period of recovery. Their priority on residential as well as infrastructural projects are making the recovery process possible. With reduction in the price of copper, Chile and Peru are not having it easy.This situation may also put projects that rely on metals, and especially the steel buildings at risk in case it persists.