Australia & New Zealand combined will see 2.9% to 3.5% GDP growth in the 3rd Q of 2022):
Skyrocketing inflation presents a huge challenge to the Austrian and New Zealand economies; Australia is forecast to see construction-related inflation in the 5.5% to 6.8% range for the 2nd half of 2022, and New Zealand is looking at 4.8% to 5.7% for the same period.
The Russia – Ukrainian war has challenged the Australian and New Zealand Construction sector, with increased inflation/escalation rates and construction material pricing spikes and shortages.
It would appear that the Australia & New Zealand construction sector has weathered the COVID virus. With that being said, it appears the 2nd half of 2022 will continue to be a challenging year for the Australia & 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 12/24 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 affect future mining-related projects.
The recently announced AUKUSA nuclear submarine deal has upset China. While it’s early days for the AUKUS program, the pact will bring several critical technological benefits to Australia.
Overseas – ocean freight costs have increased by more than 35% to 50% in that 6 months; this will impact imported materials into New Zealand. Procuring overseas construction materials has sent the cost of imported lumber, plywood, copper, rebar, windows, roofing, plumbing & electrical components, and other materials as a serious problem for both Australia and New Zealand
Contractors are experiencing material shortages. Delivery times on construction materials have increased from a normal 2 to 6 weeks to 6 to 20 to 32 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.