Bright spots in sluggish global construction sector

17 February 2013

The United States, Brazil and Germany offer the best opportunities for UK construction companies but elsewhere activity remains sluggish, according to the latest market report from Dutch insurers Atradius.

The construction industry is widely seen as being an accurate barometer of a country’s wider economy.

The report identifies a slow improvement in the US economy accompanied by increased house building, which will continue throughout this year. The insurers have raised their assessment of the US construction industry from “poor” to “fair”.

The German economy has performed better than its European neighbours. “In fact, the problems elsewhere in the Eurozone have boosted Germany’s residentialsubsector, which is seen by international investors as a safe bet,” adds the report.

In Brazil, where growth of 3.3 per cent is expected this year, the construction sector has been growing faster than GDP. The main fears are a housing price.

France’s sluggish expected growth of just 0.2 per cent this year is reflected in the country’s construction market, hampered by “public budget cuts, low investment, cautious and cash-strapped consumers and scarce bank loans”.

Atradius says both the Turkish and Hungarian construction sectors remain in crisis. The insurers have downgraded their assessment of Turkey from “fair” to “poor”. It believes Turkey’s problems are less about the overall economy, which is performing reasonably well, than surplus stock and VAT hikes.

The report says that while in Mexico the outlook for construction is good, there is still need for diligence because the country’s economy is vulnerable to external factors – especially the economic fortunes of the US.