RUSSIA (Russia is forecast to see negative GDP growth in the 1st Q of 2023):
Russia is currently experiencing a high construction inflation rate between 12% and 14%. This, of course, will lead to higher construction costs or projects getting canceled in the 1st Q of 2023.
The USA, European Union, UK, Canada, Japan, South Korea, and Australia have leveled tough sanctions/penalties on Russia, with possibly more to come as a result of their hostilities against Ukraine. Russia will have to deal with the severe sanctions that could cripple its economy and construction sector.
Russia is a very significant supplier/exporter of oil, natural gas, and metals. Elevated prices on essential materials/metals /commodities have started triggering major price spikes around the world. Ukraine and Russia supply up to 35% of the world’s wheat and barley requirements, and countries in the Middle East and Africa are major importers of these crops. Prices have risen by more than 40%, with Russia and Ukraine unable to export these products.
The Russian economy, before the commencement of hostilities in Ukraine, was slightly smaller in economic terms than Italy. Look for the Russian economy and construction sector to contract by at least 10% to 20% in 2023, with price hikes, high inflation, and rising unemployment appearing on the cards in the next 3 to 6 months.
Russia and Ukraine are both large exporters of some specialty metals/minerals such as Palladium, Titanium, and Manganese/Nickel. This will probably cause shortages and price increases. Ukraine is also a large exporter of wheat (it supplies 35% of the world’s output). This is another issue to deal with.
Are sanctions against Russia working? The answer is NO, they are not. The Russian Ruble is currently one of the world’s strongest-performing currencies. The Russian Ruble has been resuscitated by enhanced crude oil exports to China and India.
Needless to say, 2023 will be a challenging year for the Russia l construction sector. The effect of the ongoing war with Ukraine on the construction sector has yet to be fully understood.
Unfortunately, the Russia-Ukraine crisis has impacted the Global Economy and Global Construction Sector. Look for this problem to continue until a peaceful solution can be found.