Worldsteel Update on Global Construction Sector Prospects
Strategic Research Institute
Published on :
26 Oct, 2022, 6:18 am
The World Steel Association in its latest Short Range Outlook for 2022 and 2023 said that “The post lockdown recovery in construction activity was hindered first by supply bottlenecks and then surging materials costs. Global construction activity is facing further challenges in the coming years as interest rates start to rise across many regions for the first time since the global financial crisis. The residential construction outlook has deteriorated considerably due to rising funding costs, lowered purchasing power, and weak confidence. On the other hand, despite the headwinds, infrastructure remains a bright spot in many regions, as governments are focusing on infrastructure projects.”
In China, the property market remains depressed, and a strong rebound is not expected due to low buyers’ confidence. With some relaxation measures in the real estate market expected, a slight improvement in 2023 is likely. Infrastructure investment could take a more positive momentum as the Chinese government is relying on infrastructure investment to support the weak economy.
In the US, the new Infrastructure Law is expected to boost investment in infrastructure sharply despite the deteriorating overall economic environment. The boom in residential construction is fading amid high construction costs, rising mortgage rates and elevated home prices. Sharply rising interest rates will delay the recovery of the non-residential sector.
In the EU, construction activities are generally weakening amid high material costs, a shortage of materials, rising interest rates, and falling confidence. Italy for its part has seen strong construction growth in 2022 on the back of government incentives, but the future outlook is uncertain.
In Japan, civil engineering projects associated with natural disaster prevention programmes will support construction steel demand.
In India, a strong push for infrastructure, including roads and metro projects, will continue to drive steel demand. Urban infrastructure development will also drive the residential sector’s recovery.
Across ASEAN, governments are focusing on resuming delayed or halted infrastructure projects. Still, tightening monetary policy and rising costs may undermine growth in residential construction in the region.
Mexico is facing a very weak recovery in construction: the sector is not expected to reach pre-pandemic levels in 2023. In Brazil, the construction sector is also slowing down after a strong performance in the first half of 2022.
In the GCC countries, budget-buffering efforts are delaying new projects in the short term, but high oil prices will lead to more construction activities in the near future.