US $4 trillion market

Construction revenues are expected to nudge close to US $4 trillion this year, offering employment opportunities and higher salaries across the globe.

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By  Eudore Chand Published  December 1, 2003

Construction revenues are expected to nudge close to US $4 trillion this year, offering employment opportunities and higher salaries across the globe. The richest rewards are likely to be in emerging markets like China and India. The United States and Western Europe are registering the lowest growth, but labour shortages in these mature markets are forcing up salaries. Global Insight Inc., an economic and financial research firm, has gauged construction activity in 55 countries using indicators such as each nation’s spending history, current work, rate of economic development and likely business risks. While spending of US $4 trillion is just 2.8% higher than 2002, the report is more bullish on the future. Spending in the 55 countries will grow by 4.6% annually for the next five years, with China and India accelerating even faster. “We looked at historical estimates and the economies of each country as a whole, along with their stage of development,” said Chris Holling, managing director of Global Insight. Also factored into the firm’s construction research are announced projects in each country and the economic and political risks of the areas. Markets tracked by the detailed study, which costs US $18 000 to buy, range from housing and commercial to oil refining and infrastructure. The US dominates the report with the largest national construction market, which Global Insight predicts will hit US $903 billion this year. Expected US spending growth is dismal at 1.6%, but the study predicts a turnaround in spending by the end of 2004. Japan retains second spot in the report, but its short- and long-term growth prospects are the worst among the study’s top 15 nations. Countries with the highest potential growth rates also come with the highest inherent risks, according to the report. China continues to balloon as a construction market, with growth projects at 9.2% this year and 8.5% on average for the next four years. India leads all nations in construction spending growth through to 2007, with an estimated 10.1% hike in 2004 alone. Like China, however, there are associated risks. “It’s a risk-reward market,” said Holling. The risk-reward equation is reversed in Europe where economic and political stability compensates for low growth rates. “Western Europe looks to be weak this year, but there should be a rebound in 2004/5,” said Antonia Prlic, a Global Insight analyst. The UAE was not singled-out in the Global Insight report, but growth in this market would be classified as low risk and high growth using the report’s methodology. www.globalinsight.com

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