Research by KHL Group, publisher of International Construction and D&Ri magazines, shows that global fiscal stimulus could add US$ 355 billion per year to the world’s construction output in 2009 and 2010. This is equivalent to an additional 7% on top of the world’s current annual construction output of about US$ 5 trillion, and equates to more than the annual construction output of Germany, the fourth biggest market in the world.
Chris Sleight, editor of International Construciton magazine said, “The potential boost to the global construction industry from fiscal stimulus packages over the next two years could be enormous. US$ 355 billion is greater than the GDP of many medium-sized countries, and in terms of construction it is greater than the size of the German market – the fourth biggest market in the world.”
He continued, “The key now is for the spending pledges to translate into real on-the-ground activity. Governments need to make sure their planning and tendering processes are as stream-lined as possible and that there are no bureaucratic obstacles in the way of these plans being effective.”
The total additional spending to shore-up economic growth in 20 major economies is set to exceed US$ 1.9 trillion, of which US$ 795 billion has been ear-marked for construction. Most of this will be spent in 2009 and 2010, however schemes such as Brazil’s housing-focussed package will be longer term.
Of all the major economies, China’s extra investment in construction will be the most over the next two years, with US$ 450 billion of its US$ 585 billion stimulus package earmarked for infrastructure. That investment of US$ 225 billion per year for two years is equivalent to an extra +40% boost to China’s US$ 540 billion per year construction output.
Details of the US stimulus package are yet to be finalised, but current indications are that US$ 120 billion out of the total of US$ 800 billion will be invested in transport and energy infrastructure.
In Europe, Germany has unveiled a EUR 50 billion (US$ 65 billion) stimulus package, of which some €EUR 18 billion (US$ 23.4 billion) will be invested in infrastructure.Meanwhile France has announced it will invest €EUR 10.5 billion (US$ 14 billion) in infrastructure and public works and Spain’s stimulus package includes EUR 11 billion (US$ 14.5 billion) for similar schemes.
Elsewhere in the world, smaller developing economies are also planning to spend extra on construction during the economic downturn. These include Chile, which has allocated an extra US$ 700 million to public works this year and Indonesia, where a stimulus package is also planned.
Besides funds earmarked for construction, many other countries have less specific stimulus packages on the table for this year which are expected to provide a major boost to the industry. Mexico for example plans to invest US$ 54 billion to see it through the global downturn this year, and most of the spending is expected to go on infrastructure.
