Outlook for the Construction Industry in East-Central Europe
After completion of a successful privatization program, the construction industry in East-Central Europe has been on the upswing since the mid-1990s. In the period from 1995 to 1997 the volume of construction in the Visegrad countries is expected to rise by 5 percent on average per year. This trend is likely to continue over the next few years. In all countries of East-Central Europe improvements in infrastructure provided the strongest impulses to construction activity. Civil engineering boomed in Poland and the Czech Republic. Following a short-lived surge in 1994, industrial construction in Hungary declined markedly in 1995-96 as a result of austerity measures; a reversal is forecast for 1997, however. Aside from infrastructure projects, construction of office buildings and other commercial buildings posted the highest growth rates. With the exception of the Slovak Republic, non-residential construction grew vigorously in all countries of East-Central Europe. Residential construction, however, is in a deep slump in this region. In 1996, only one housing unit per 1,000 inhabitants was completed, while the corresponding figure for Western Europe is 5. Subsidies in residential construction were sharply curtailed in all countries of East-Central Europe, but so far no new policies for dealing with the housing shortage have emerged. Policymakers are called upon to create an appropriate framework for reviving residential construction. The great potential in the renovation and modernization sector has so far not been adequately exploited. The construction sector is likely to grow at an annual rate of 5 percent over the next few years, if it is possible to direct more foreign capital into this sector, to create a framework for long-term financing of construction projects, and to boost residential construction.
Perspektiven der Bauwirtschaft in Osteuropa; Outlook for the Construction Industry in East-Central Europe
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