Ongoing eurozone crisis has led to a sharp downgrade in forecast construction growth across Europe
The ongoing eurozone crisis and the prospect of Greece exiting the single currency has led to a sharp downgrade in forecast construction growth across Europe over the next two years with no overall growth expected until 2014, the Euroconstruct research group has said.
Euroconstruct said this week that the “worsening economic prospects” across Europe had led to a “significant downward revision” to its construction forecasts for this year and next, from -0.3% to -2.1% in 2012 and 1.8% to 0.4% in 2013.
It said that even with forecast growth of 1.7% in 2014, construction output across the 19 European countries covered by Euroconstruct would still be nearly 12% down on 2008.
It said that over the period from 1992 to 2007 annual average construction across the 19 countries was 1.5% and that if this growth rate was applied to the future, output would not return to 2008 levels until around 2023.
It said civil engineering was forecast to be the worst hit sector, with an annual rate of decline of -1.4% over the three years to 2014 compared with 0.4% for the non-residential sector and growth of 0.9% for residential construction.
The institute said it had also downgraded its overall GDP growth forecast for Europe, with the 1.1% growth forecast for 2012 last November cut to just 0.2% and the forecast of 1.7% growth in 2013 down to 1.3%.
Euroconstruct said that in the first few months of 2012 it had seemed that the euro crisis had abated as fiscal austerity and rescue plans were agreed across Europe, but now the crisis had “returned with a vengeance”.
“There seems to be increasing acceptance that Greece will default and be forced to exit the eurozone and the rising worry is of contagion,” the institute said.