Australia and New Zealand combined will see 1.8% to 2.7% GDP growth in the 2nd half of 2023):
The general consensus is that both Australia and its smaller Pacific Ocean neighbor New Zealand are set to see slow/ steady future construction growth in the 2nd half of 2023 and in 2024. The Australian construction sector is estimated to be $110 billion and accounts for close to 9% of Australia’s GDP.
Unfortunately, the Australian construction sector has seen better days. A number of major construction companies have gone out of business in the last 6 months. However, there appear to be some positives related to future construction activity. There is a severe shortage of skilled construction workers, including welders, masons, carpenters, and a number of other trades. It appears that many baby boomers are retiring and young workers are not attracted to the construction sector. Australia’s CPI inflation rate is between 4.8% and 5.5%. Construction is one of the top 5 industries in Australia.
Australia’s economic relationship with China has cooled down dramatically in the last year or two. This issue is related to the South China Sea territory 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 disturbed China. While it’s early days for the AUKUSA program, the pact will bring a number of key technological benefits to Australia.
The New Zealand construction sector continues to face headwinds. A number of major construction companies have gone bankrupt in the last 9 months. A shortage of skilled workers remains a problem. New Zealand’s CPI inflation rate is between 5.1% and 5.3%. That, of course, impacts construction costs.
Overseas ocean freight costs have started to trend marginally downwards. The importation of construction materials and capital goods into both Australia and New Zealand is a significant cost for both countries.