Australia

Australia and New Zealand combined will see 2.5% to 3.3% GDP growth in the 2nd Q of 2022: 

The Russia – Ukrainian war will challenge the Australian and New Zealand Construction sector, with increased inflation/escalation rates and construction material pricing spikes, and possible shortages.

It would appear that the Australia and New Zealand construction sector has weathered the COVID virus. That being said, it appears that 2022 will continue to be a challenging year for the Australia and New Zealand construction industry.

Construction is one of the top 5 industries in Australia and represents approximately 10% of the country’s annual GDP. The value of construction work each year is in the $350 to $400 million range and the industry employs between 1 and 1.25 million individuals.

Australia’s economic relationship with China has seriously cooled down in the last 12 months. This issue is related to China’s South China Sea territorial claims that Australia is criticizing. This dispute will impact Australian mineral exports and could impact future mining-related projects. 

The recently announced AUKUSA nuclear submarine deal has upset China. While still in its early days for the AUKUS program, the pact will bring several key technological benefits to Australia.

Procuring overseas construction materials has sent the cost of imported lumber, plywood, copper, rebar, and other materials skyrocketing in both Australia and New Zealand, however, some of these price spikes are beginning to show themselves again, possibly due to the Russia – Ukraine conflict.

Contractors are experiencing material shortages. Delivery times on construction materials have increased from a normal 2 to 4 weeks to 6 to 20 weeks to arrive at the site and even longer in some cases.

Supply chain interruption issues look like they will get worse over the next couple of months.

Overseas – ocean freight costs have increased by more than 35% in that 15 weeks. This will impact imported materials into both Australia and New Zealand.