Over the next 7 years the global construction industry will grow from $7.2 trillion to over $12 trillion. In a report called Global Construction 2020 by Global Construction Perspectives and Oxford Economics major global and regional construction trends are analyzed by key countries. The report shows that developing or emerging countries will overtake developed countries in market share by 2020.
The global construction industry currently represents about 13% of global GDP and this number will increase to 15% in 2020. Countries poised to undergo the largest growth include China, India, Russia, Brazil, Poland and the US.
Construction in developing or emerging markets is set to increase by 110% and infrastructure construction by 128% with China being the primary engine of growth accounting for 20% of this growth. These numbers are projected with the aftereffects of the financial crisis and subsequent global rescue packages factored in.
It remains to be seen whether the world economy will grow or slip back into a downturn which could affect long-term growth projections. It is believed Germany, France and Japan have hit bottom and are on their way back. Economic malaise will affect different countries differently as they each have unique strengths and weaknesses in attempting to put their economies back on track.
Nearly all countries seem to be running into a head wind with respect to budget constraints but emerging markets seem to have escaped the worst of the financial downturn as their economies were not fully integrated into global financial markets when they began to crumble in 2009.
The global construction industry has a number of challenges and opportunities according to Global Construction Perspectives and Oxford Economics and a number of factors will affect outcomes:
- What will countries decide with respect to carbon reduction, climate change, waste disposal, clean technology and renewables?
- If global markets continue to heal it is estimated that worldwide GDP will increase by an average of 3.5-4.0 percent per year.
- Emerging economies in general are expecting large population increases in the coming decade creating demand for construction activity whereas population growth in developed countries will be flat.
- Relatively speaking developing countries are expected to grow at 2 to 3% per year and emerging countries at 6 to 7% per year.
- Emerging countries currently represent about 35% of global construction output and this is expected to increase to 55% by 2020.
- The key area of construction growth in emerging countries will be infrastructure: transport, energy, social infrastructure, schools, hospitals, government accommodation, water, defense infrastructure and natural resources. These projects are expected to increase by 130% in developing countries by 2020 but by only 20% in developed countries.
- Amongst developed countries North America is will see the highest growth rate mostly in residential construction which will grow at double digits annually. South and Central America, the Middle East and Africa will grow moderately with Western Europe seeing the lowest growth.
- Eastern Europe and Russia are expected to expand construction by 100% primarily led by Poland and Russia by 2020.
- China is expected to become the world’s leading construction market by 2018 with a construction output of $2.5 trillion.
It will be interesting to follow this process as it unfolds. Engineers in the construction industry who have been educated and live in the West must anticipate they may be called upon to work overseas in the coming years as that is where the majority of jobs will be found.
The following video discusses global construction to 2025.
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