Arcadis’ Will Waller analyses the 2018 Arcadis annual survey of global construction costs
From forest fires to trade tariffs, presidential visits to spy scandals, 2018 has certainly been tumultuous. Nevertheless, sentiment is high and the global economy continues to grow – at a rate that is expected to be almost 4% this year and next.
Construction demand is typically closely related to broader economic performance. The global construction market is worth more than $8tn and the sector has been enjoying healthy annual average global growth rates in recent years, with a further 4% growth expected in 2019.
However, in a world where markets are intricately interconnected, economic and geopolitical events may be taking their toll, causing an increasingly uncertain outlook. In some economies, growth rates seem to have topped out and economic performance around the world is starting to look less synchronised. Even the celebrated and eminent One Belt, One Road development strategy curated by the Chinese government is showing signs of progressing slower than previously anticipated.
Increasing oil and commodity prices, rising interest rates, trade tensions and currency pressures are all playing their part in unsteadying the ship a little, as well as contributing upwards pressure on construction costs, which could negatively affect the viability of projects and reduce demand for construction.
The overheating of markets has put industry performance under the spotlight for some time, but growing economic and geopolitical uncertainty is taking its place as a reason to further enhance focus on cost reduction and productivity boosting initiatives.
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