The Global Construction market is projected to expand over the next five years to a value of $9 to $11 trillion. This expansion will for the most part occur in the up-and-coming developing economies of Africa (Ethiopia, Ghana & Nigeria), Asia (Vietnam, Laos, India & Indonesia) and South America (Colombia, Chile & Central American Countries) . This progression will be driven by population growth, the movement of people from rural areas to cities and towns, lower cost labor / trade opportunities and the development of basic infrastructure needs (roads, schools, hospitals, airports & the like). The construction value of the up and coming developing economies of Africa, Asia and South America is estimated at a value of $5 + trillion in just 5 years from now, (this means that approximately 50% of new construction will be in the up-and-coming developing countries located in Africa, Asia & South America). The developed construction markets in Western Europe, North America, Japan and Australia will carry on growing at a much more subdued rate, perhaps 1% to 2% per year in this five year period. Canada the world’s 5th largest oil producer, has been hit hard by the nose-dive in world oil prices, from $85 a year ago to $38 a barrel. The Canadian economy slipped into recession in the 1st half of 2015. Indications are that Canada will most probably have a new Prime Minister after October 19th election.
North America GDP growth for 2015 is forecast to be 2.4%, for South America 2.8%, W. Europe 1.1%, for Eastern Europe 0.9%, the Middle East is forecast to see 3.4%, Asia 4.4% and Sub-Sahara Africa is forecast to see 3.7% GDP growth in the 4th Q of 2015.
Current political and world issues that could impact the above are:
The huge migration of political refuges / asylum seekers from Syria, Iraq, Afghanistan & Africa, thought to number anywhere from 0.5 to 2 million people that are currently or planning on entering Italy, Greece, Hungary & Germany. The cost of providing housing, education and integration into the country that these individuals eventually reside could turn into a huge economic challenge to the European Union, Italy, Greece, Hungary & Germany.
China is experiencing a significant construction slowdown, bulk & engineered material prices are rising very slightly, 1% to 2% per year, labor costs are a different matter, wage rates for Construction Professionals and Skilled & Unskilled Workers are increasing between 6% & 9% per year in some of the major coastal cities.
Nobody knows what a barrel oil of oil will cost in the next two months, will it be $30 to $40 a barrel. Some industry experts are forecasting an oil glut for the next 5 years if Iranian oil is allowed to enter the marketplace.
Russia’s possible moves further into the eastern Ukraine & the potential of this happening again in the Baltic States (Latvia, Estonia & Lithuania).
If these concerns can be resolved or allayed, then the global construction sector has a decent chance to grow and prosper in the next two to five years; particularly the up-and-coming developing economies of South East Asia, Africa & South America. In the 4th Q of 2015 World GMP growth is forecast to be in the 2.6% to 3.3% range.