Report Shows Construction Growth Set to Outpace GDP

A new report, entitled Global Construction 2020 issued jointly by research firms, Global Construction Perspectives, New York, and Oxford Economics, London, forecasts spending on U.S. construction to grow by an annual rate of 5.9 percent over the next decade, outpacing growth in GDP (Gross Domestic Product).

During the second quarter of 2011, private sector investment in U.S. construction rose by an annual rate of 8.1 for non-residential and 3.8 percent for residential construction, reversing declines in the first quarter of 2011, according to the two firms. This is compared to a 1.3 percent expected annual growth in the second quarter of 2011 of 1.3 GDP.

“Construction in the U.S. is expected to rebound from the downturn led by short-term double digit growth in both residential and nonresidential markets,” says Graham Robinson, director, Global Construction Perspectives and an author of the Global Construction 2020 report.

Global Construction Perspectives and Oxford Economics estimate $4.5 trillion will be spent on U.S. construction in 2010 prices over the next decade to 2020.

The report adds that the annual rate of growth in private sector investment in residential construction, at 9.4 percent also outperformed growth of 3.9 percent in Canada during the first quarter of 2011 while investment in nonresidential construction grew by an annual rate of 11.8 percent driven by 15.4 percent growth in infrastructure investment.

Global spending on construction is also forecast to outpace world GDP over the next 10 years as growth in Asian powerhouses and a cyclical rebound in the U.S. fuels growth in construction from $7.2 trillion today to $12 trillion by 2020, says the report.

“China overtook the U.S. in 2010 as the world’s largest construction market, but the U.S. will still remain the world’s second largest construction market in 2020,” says Doug Godden, senior economist, Oxford Economics.

The report also projects Japan will become the third largest construction market by 2018. In addition, seven countries: China, U.S., India, Indonesia, Canada, Australia, and Russia, will account for two thirds of growth in global construction to 2020.

Growth in China, India and the U.S. will account for over half of the predicted $4.8 trillion growth in global construction to 2020, the report adds.

The report attributes a cyclical rebound as well as a growing population driving growth in U.S. construction, while rising populations, rapid urbanization and strong economic growth are key drivers for construction in emerging markets.