OXFORD ECONOMICS – GLOBAL CONSTRUCTION REPORT

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Global Construction costs to remain high in 2023

Key points:

• The global rebound in construction activity is set to continue over the coming years, supported by a wave of publicly funded infrastructure projects. This investment is coming at a time when global supply chain disruptions are hampering the delivery of construction materials, and tight labour markets are limiting the supply of labour. The resulting supply-demand mismatch has driven up construction costs, increasing the risks of cost-blowouts as well as project delays and cancellations
•  Lockdowns in China and the Russia-Ukraine conflict have intensified global supply chain disruptions which means that input costs are likely to remain elevated for some time. While we write about national averages in our various construction service, there are sub-national and sub-sector variations. Please contact us if you would like more granular information.
• A boom in residential construction activity across advanced economies saw the real value of global construction work done rebound 2.3% in 2021. Residential investment boomed, particularly in the Americas, as low interest rates, strong household finances, and shifts in household spending boosted the appeal of single-family dwellings. The ramp up in demand, however, coincided with Covid-induced supply chain disruptions and mobility restrictions. This mismatch between supply and demand drove a jump in construction costs across the globe, particularly for single-family homes.
• The upswing in global construction activity is set to continue over the coming years. Governments around the world responded to the coronavirus pandemic by fast-tracking major infrastructure projects, as investments in the economy’s productive potential has proven to be a key driver of economic recoveries in the past. The Infrastructure Investment and Jobs Act in the US provides US$500bn in new spending over the next decade, with significant funding going to new highways, railways, and bridge projects. The European Union’s Next Generation EU fund will support a ‘renovation wave’ as the EU works towards decarbonising the continent’s building stock. In Asia, China is set to undergo an infrastructure boom, as the authorities look to infrastructure investment to not only help offset the real estate downturn, but also to help the economic recovery following the Shanghai lockdown.

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About Oxford Economics:

Oxford Economics is one of the world’s foremost independent global advisory firms, providing reports, forecasts and analytical tools on 200 countries, 150 industrial sectors and 7,000 cities and regions. Its best-in-class global economic and industry models and analytical tools provide an unparalleled ability to forecast external market trends and assess their economic, social, and business impact.