RUSSIA (Russia is forecast to see 1.5% GDP growth for the remainder of 2019):
Construction activity in Russia is seeing a nominal improvement as we move into 2019. Russian voters gave President Putin big win in late March, almost 70% of the electorate vote to give him his 4th term as President. It is hard to anticipate at this time the impact of his election will have on the Russian construction sector. Recent accusations by the UK Government of a poisoning incident in the UK have somewhat faded into the background, the recent seizure of a number of Ukrainian ships and their crews by Russian military forces continues to be problematic.
In Moscow and a number of other major Russian cities, a huge ongoing repair, modernization and renovation effort is ongoing to literally 1,000’s of apartments and hi-rise tower blocks built in the 1960’s and 1970’s. This huge ongoing project(s) could last up to five years to complete and cost in excess of $7 billion.
Russia recently became the 2nd largest oil producer, behind the US, producing more than ten million barrels of oil a day. The Russian GDP forecast for 2019 is between 1.4% and 1.7% which is a drop from a year ago. The Russian economy is expected to improve modestly in 2019 and of course this will positively impact construction activity. Falling oil revenues and trade restrictions from the European Union and the US over the Ukraine situation has been a drag on the Russian construction sector: Unemployment in the construction industry is somewhere between 10% and 12%, unemployment in other industries is forecast to be 4.7% to 5.2% for the balance of 2019. Construction inflation in 2019 is forecast to be in the 4.7% to 5.1% range. The Russian construction market is forecast to experience some moderate growth in the oil / gas sector and restrained growth in the commercial / housing construction sector in 2019. It is worth noting that the Russian economy is similar in size to Italy, population 59 million, which is currently the 3rd largest European Union country. Russia’s population is 147 million.