Residential market woes weigh on global construction

16 February 2024
GlobalData estimates that construction in advanced economies will shrink by 1.2% in 2024

Residential weakness will continue to drag down overall output growth for the global construction sector, according to a recent report by GlobalData.

Despite the challenging macroeconomic and geopolitical backdrop, the global construction industry managed to continue to generate growth momentum in 2023, with global output rising by 3.4% in real terms.

Much of the growth came from China’s surprisingly strong performance despite the prolonged real estate crisis there, which has significantly impacted investment in building activity.

Construction in the US also picked up in the second half of the year, which pushed global construction industry output growth excluding China to 2.0% in 2023.

Although recording an expansion in 2023, the global construction industry is in a fragile state, and there is a clear divide in terms of how the industry is performing in terms of both a geographic and sector breakdown.

With interest rates remaining at a high level, new investment in the residential buildings sector has fallen sharply. This has particularly been the case across North America and Europe, where residential building permits have plummeted. In some major markets, activity levels have held up better than expected, but this only implies that a severe downturn is still to come.

Reflecting these issues, GlobalData estimates that construction in advanced economies will shrink by 1.2% in 2024. For emerging markets, the expansions in the large markets of China and India have driven up overall output levels and growth of 2.6% is expected in 2024, following an increase of 5.6% in 2023.

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