P
redicting the future has never been easy, and since the financial
crisis of six years ago, the global economy seems to have
becomemore volatile and challenging.The construction industry
illustrates this trendwell – a year ago there seemed to be something of a
slowdown going on around the world, but it was being felt more in the
mining sector than anywhere else, as global commodity prices fell.
As such, it was seen as something of a blip, and the received wisdom
was that markets would improve this year. Particularly encouraging was
the expectation that Europe would finally return to growth, and as a
result, construction output would increase in every region of the world
in 2014, for the first time since 2007.
For the first half of the year, that looked like a reasonable forecast.
However, in the last six months or so the global outlook has become
a little shaky. Russia’s incursion into eastern Ukraine has been one
problem. The sanctions and other political fallout from this could
have a significant impact on Russia, as it becomes more isolated in a
world where international trade is increasingly the route to growth and
prosperity.
Another issue in recentmonths has been theweakeningoutlook for the
Euro -Zone, where deflation looks a real threat and former powerhouse
economies like Germany are seeing a slowdown. There are also other
concerns in the world such as the outbreak of Ebola in West Africa,
which has proved difficult to combat and contain, with the loss of
thousands of lives.
For these and other reasons, global economic growth and the fortunes
of the constructionmarket have not been as positive as theymight this
year. The latest forecast from the International Monetary Fund (IMF)
is that the world economy will grow +3.3% this year, as opposed to the
previous forecast of +3.7%. Next year the forecast is for +3.8%GDP
growth.
Construction output tends to track the ups and downs of GDP pretty
closely, and the figures tend tobe a littlehigher due to theheavy focus on
building and infrastructure in emerging economies. So in 2014 it would
be a reasonable estimate to say global construction output grew more
than +3.3%, but probably less than +4.0%.
That is less than it might have been, but with a global market worth
US$8.5 trillion, it stillmeansUS$280billion toUS$340billionmore
construction activity took place in 2014 than last year.
Against such a difficult forecasting background, it would be foolish of
me tomake any firmpredictions for 2015. It is fair to say that prospects
for 2015 lookbetter than this year, but thatwas also the case for 2014 at
the end of 2013. A year down the line, it does not look like growthwas
as good as it was hoped in 2014.
But there are encouraging signs for next year. The lower oil price is
helpful to global economic growth, and therefore construction, although
itmaymean a bit of a hiccup in oil-producing countries – andRussia is
one of those that will probably see an impact.
Elsewhere in the world, there is a sense that the poorer than expected
economic growth of 2014 requires a policy response. I am hopeful that
therewill be some stimulus for themarketnext year, especially inEurope,
where it ismost needed.
I continue to be cautiously optimistic about the global
construction market – it is growing after all, and has
done every year since 2009. However, as this year has
shown, it is probably best to expect the unexpected.
Chris Sleight
Editor
KHL OFFICES
UNITEDKINGDOM (HEAD OFFICE)
Southfields, Southview Road,
Wadhurst, East Sussex TN5 6TP, UK.
Tel: +44 (0)1892 784088
Fax: +44 (0)1892 784086
USA OFFICE
KHL Group Americas LLC
3726 East Ember GlowWay,
Phoenix, AZ 85050 USA
Tel: +1 480 659 0578
e-mail:
SOUTHAMERICA OFFICE
KHL Group Américas LLC
Manquehue Norte 151, of 1108.
Las Condes, Santiago, Chile
Tel: +56 2 2885 0321
e-mail:
CHINA OFFICE
KHL Group China
Room 768, Poly Plaza, No.14, South Dong
Zhi Men Street, Dong Cheng District,
Beijing 100027, P.R. China.
Tel: +86 (0)10 6553 6676
e-mail:
KHL SALES
REPRESENTATIVES
ADVERTISEMENTMANAGER and
USA/INDIA
Alister Williams
Tel: +1 312 860 6775
e-mail:
CORPORATE ACCOUNTMANAGER
David Stowe, UK Head Office
Tel: +44 (0)1892 786217
e-mail:
GERMANY/AUSTRIA/SWITZERLAND/BEN-
ELUX/EASTERN EUROPE
Simon Battersby, UK Head Office
Tel: +44 (0)1892 786232
e-mail:
CHINA
Cathy Yao
Tel: +86 10 6553 6676
e-mail:
FRANCE
Hamilton Pearman
Tel: +33 1 45 93 08 58
e-mail:
ITALY
Fabio Potestà
Tel: +39 010 570 4948
e-mail:
JAPAN
Akiyoshi Ojima
Tel: +81 (0)3 3261 4591
e-mail:
KOREA
CH Park
Tel: +82 2 730 1234
e-mail:
NORDIC COUNTRIES
Peter Gilmore
Tel: +44 (0)20 7834 5559
e-mail:
TURKEY
Emre Apa
Tel: +90 (0)532 324 36 16
e-mail:
SPAIN
Mike Posener
Tel: +353 86 043 1219
e-mail:
UK
Lynn Collett, UK Head Office
Tel: +44 (0)1892 786219
e-mail:
USA/CANADA
Alister Williams
Tel: +1 312 860 6775
e-mail:
CLASSIFIED SALES
Paul Watson, UK Head Office
Tel: +44 (0)1892 786204
e-mail:
International Construction
(USPSNo: 021-895)
is publishedmonthly by KHLGroup and
distributed in theUS byDSW, 75AberdeenRd,
Emigsville, PA17318-0437. Periodicals postage
paid at Emigsville, PA. Postmaster: send address
changes to
International Construction
,
POBox 437, Emigsville PA17318-0437.
ISSNNo: 0020-6415
USPSNo: 021-895
© Copyright KHL Group 2014
COMMENT
3
december 2014
international
construction
The paper in thismagazine originates from timber that
is sourced from sustainable forests, managed to strict
environmental, social, and economic standards. The
manufacturingmill has both FSC& PEFC certification,
and also ISO9001 and ISO14001 accreditation.
