Gradual Recovery of Western Europe's Construction Industry
The construction industry in western Europe is now in the process of recovering from the severe crisis experienced at the beginning of the nineties. Heavy output losses in 1993 (–4 percent) were followed by a slight upturn in 1994 (+1.3 percent); a growth rate of 1.8 percent is forecast for 1995. The current upturn in construction activity in Europe is rather modest because in some countries cutbacks in public programs restrict the demand for construction. In western Europe the various branches of construction are characterized by the following tendencies: – The decline or stagnation in residential construction observed in most countries of western Europe at the beginning of the nineties is coming to an end. New residential construction picked up as early as 1994 (+5.6 percent), but the upswing will weaken somewhat in 1995 (+2.6 percent). In West Germany, the strong upturn has begun to level off as government programs are being terminated. In Austria, too, residential construction boomed in 1994, mainly as a result of a generous government support program; the government's consolidation drive will, however, dampen the expansion in this sector. – Private non-residential construction hit bottom as late as 1994. For the first time since the crisis began in the early nineties, growth rates will be recorded in 1995 (2.7 percent). The overall economic recovery tends to have a positive effect on the investment decisions of entrepreneurs. In Austria, however, there are still no signs that the construction of office, commercial, and industrial buildings has begun to pick up again. Excess capacity is impeding a speedy recovery. – A further stagnation is forecast for public non-residential construction and civil engineering in western Europe. In view of high public deficits most western European governments are attempting to cut back on new projects and to delay maintenance projects, particularly in civil engineering. – In Austria as well as in western Europe modernization and renovation activity has become one of the most important branches of the construction industry. It accounts for more than one third of the volume of construction put in place in western Europe. During the last few years the demand for such construction activity has been left unfilled and several years will be needed to work off the excess demand. Modernization and renovation activity varies greatly from one country to another, depending on the age composition of building structures. The demand for renovation and modernization services continues to be lively in Austria, but a gradual slowdown is expected. The construction industry in East-Central Europe (Hungary, Poland, the Czech and Slovak Republics) changed drastically in 1994. A great number of construction firms were privatized; as a result a great building boom set in. In all four countries of East-Central Europe construction activity is forecast to expand in 1995. Poland, Hungary, and the Czech Republic expect growth rates of between 4.5 and 6.5 percent; a modest 1 percent is likely in the Slovak Republic. For the whole construction industry, western investors are of great importance: they not only stimulate the construction of industrial and commercial buildings, they also contribute considerably to the infrastructure in these countries by tapping new financial resources.
Baukonjunktur erholt sich in Europa langsam; Gradual Recovery of Western Europe's Construction Industry
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