Construction industry expects lower growth

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In the first quarter, Serbia had a decline in construction activity, but in the second the picture improved

The construction industry will record a lower real growth than previously expected, primarily as a result of growing global uncertainty and a smaller volume of private investments, but also due to a strong increase in the price of construction materials, the Ministry of Finance stated in the new fiscal strategy.

In the first quarter, construction had a decline of 4.7 percent. The original growth projection of this economic branch was 7.4 percent for 2022, but the current projection foresees a growth of 1.4 percent.

Ivan Nikolić, research associate of the Economic Institute, states that construction activity in the Eurozone grew by three percent, but in some markets, such as Germany, it recorded a drop of 1.5 in March and 1.2 in April, while in the same month in Romania it had year-on-year decrease of 8.1 percent.

– In April, there was an increase in construction activity of 4.6 percent compared to April last year. In May, we had a growth of 3.1. The first quarter was significantly weaker and we had a decline, but the second quarter is somewhat better, so for now there is nothing that could be characterized as problematic – says Nikolić.

The Ministry of Construction, Transport and Infrastructure notes that construction activity in the first half of the year is at an expectedly high level. The average number of active construction sites on the territory of the Republic of Serbia on July 1 is 105,894. Taking into account the circumstances in Europe caused by the war in Ukraine, and the strong impact on all segments of the economy, according to their opinion, these are good results.

– Despite the difficult times in Europe, we are not stopping construction, but creating conditions for new investments. We are currently implementing more than fifty infrastructure projects throughout Serbia, and in the field of traffic infrastructure alone, a total of about 1,200 kilometers of highways and expressways are being designed and built – the ministry said.

According to published data, the share of the construction sector in GDP in 2021 was six percent. As for the share of the same sector in the GDP in the current 2022, it is unrealistic to forecast anything, the ministry added.

– However, based on the relevant publicly available data, at this moment we can state that we expect the same participation or more. The share of construction in the GDP in the first quarter of 2021 was 4.7 percent, while in 2022 it was 4.6, on the basis of which we can conclude that there are no significant changes by observing the same time periods last year and this year.

We are in the midst of the construction season, where we expect real data only in October and November. The indicators are encouraging at the moment, where although we have a huge decline in construction activity in the countries of Western Europe, this is not the case in Serbia – the Ministry of Construction, Transport and Infrastructure emphasizes.

When it comes to capital infrastructure projects, they note that no project has been stopped. Works are taking place according to the predicted dynamics on the Moravian Corridor, where the opening of the first section from Pojat to Kruševac is planned for the end of the year, and which in certain segments is ahead of the predicted speed of work execution. Work continued on the construction of the high-speed railway from Novi Sad to Subotica, and the drilling of the future largest tunnels in Serbia, on the route of the “Miloš Veliki” highway from Pakovrač to Požega, is underway. Sectors four and five of the ring road around Belgrade are open, and traffic is expected to open on the ring road to Bubanj Potok within the stipulated time. The work on the Fruškogorsk corridor was accelerated, and we used the corona period for growth.

Housing construction is not lagging behind, judging by the number of construction permits. In Serbia, 2,349 construction permits were issued in May this year, which is 17.4 percent more than in 2021, the Republic Statistical Office announced. Of the total number of issued permits, 80.2 percent refer to buildings. Construction of 3,680 apartments was reported. Observed by region, the highest construction activity is expected in Srem region, 24.4 percent, followed by Belgrade region (17.9) and Šumadija region (17.5).

Housing construction in Germany is falling

The German agency DPA reports that the entire construction sector in Germany is affected by the rise in the price of construction materials and the rise in interest rates. After years of expansion, private construction and large projects are now stagnating.

– The state of the market is putting pressure on German commercial and residential construction like a straitjacket. Along with the increasingly strong requirements for energy-efficient construction, there is a shortage of construction materials and extreme price increases – they state from DPA. In the seven largest German cities, the volume of project development fell by an average of 3.6 percent between last year and this year. The biggest minus is in housing construction – 7.6 percent, Politika reports.