The Middle East and North Africa (Mena) region will be one of the best-performing geographies for construction activity in 2023 according to GlobaData’s recently published Global Construction Outlook to 2027 report.
The only geography that is expected to outperform the Mena region in 2023 is South Asia with 4 per cent growth forecast.
Construction output growth from the Mena region will reach 3.3 per cent in 2023, which is down from 3.7 per cent in 2022, largely due to slowdowns in Egypt, Algeria and Qatar.
While the outlook is positive for the Mena region compared to other markets, the report highlights areas for concern, most notably soaring inflation and supply chain disruptions that are undermining the growth potential. High-interest rates mirroring the rate hikes by the US Federal Reserve are constraining growth owing to higher borrowing costs and reduced disposable income.
The report adds that investor confidence continues to be undermined by geopolitical uncertainty, while the supply disruptions compound existing upward pressure on key construction materials.
Globally, the report says that construction growth is expected to remain sluggish in 2023 with an 0.8 per cent expansion. If China is excluded, the industry is predicted to contract by 0.1 per cent.
The report says the gloomy outlook reflects the weak economic backdrop, and additional challenges specific to the global construction industry, notably high construction material costs and labour shortages.
The poor performance in 2023 reflects the downturns across advanced economies, with Europe as a whole expected to shrink by 2.8 per cent, North America to fall by 0.9 per cent, and Australasia to contract by 1.5 per cent.
In 2022, The global construction industry expanded by 2.1 per cent in real (constant prices) terms, with the pace slowing from the 3.8 per cent growth recorded in 2021. The deceleration reflected the challenging conditions in most markets around the world in the form of high inflation and a tightening in monetary policy that has dampened investment.
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