Research Briefing | Jun 29, 2022

Global construction costs to remain high in 2023

Research paper in iPad frame

The global rebound in construction activity is set to continue over the coming years, supported by a wave of publicly funded infrastructure projects. This investment is coming at a time when global supply chain disruptions are hampering the delivery of construction materials, and tight labour markets are limiting the supply of labour. The resulting supply-demand mismatch has driven up construction costs, increasing the risks of cost-blowouts as well as project delays and cancellations.

Lockdowns in China and the Russia-Ukraine conflict have intensified global supply chain disruptions which means that input costs are likely to remain elevated for some time. While we write about national averages in our various construction service, there are sub-national and sub-sector variations. Please contact us if you would like more granular information.

What you will learn:

  • The global rebound in construction activity is set to continue over the coming years, supported by a wave of publicly funded infrastructure projects. This investment is coming at a time when global supply chain disruptions are hampering the delivery of construction materials, and tight labour markets are limiting the supply of labour. The resulting supply-demand mismatch has driven up construction costs, increasing the risks of cost-blowouts as well as project delays and cancellations.

  • A boom in residential construction activity across advanced economies saw the real value of global construction work done rebound 2.3% in 2021. Residential investment boomed, particularly in the Americas, as low interest rates, strong household finances, and shifts in household spending boosted the appeal of single-family dwellings. 
  • Global supply chains have remained stretched since the middle of 2020 and, with strong consumer and industrial demand for goods, has driven a jump in global container shipping charter rates. The construction sector is much more exposed to transportation costs than other parts of the economy due to the relatively low value-to-weight ratio of construction materials. 
Back to Resource Hub

Related posts

Post

Global Industry: Red sea attacks are a shot across the bow of global logistics

The attacks on container ships by Houthi militants have, once again, revealed the underlying fragility of the international supply chains upon which the global economy relies. The longer the attacks go on and the more ocean freight carriers decide to avoid transit through the Suez Canal, the greater the disruptive effects will end up being.

Find Out More

Post

Weakness in construction and its related sectors show the impact of interest rate hikes

Ever since the onset of advanced economies’ campaign of interest rate hikes in December 2021 there has been a lively debate about the impact and efficacy of tighter monetary policy in terms of reducing inflation and slowing growth. While inflation has indeed fallen across the world, the relative economic resilience in the United States in particular, which has raised interest rates significantly more than the eurozone, has raised questions about if and how much interest rates are actually depressing activity.

Find Out More
skyscraper construction

Post

Chartbook: Global Construction Outlook Q3 2023

Global construction activity is now forecast to fall 1.6% in 2023 and rebound 0.5% in 2024 to $9.6tn. China’s real estate downturn continues to dominate the global outlook. We now expect a slower recovery in both residential and non-residential building activity – and anticipate a more muted recovery in Chinese GDP over the medium term.

Find Out More