Blog | 25 Oct 2022

Global growth in construction of US$5.6 trillion is forecasted by 2037 as the world transitions to clean energy

Graham Robinson

Global Infrastructure and Construction Lead

Oxford Economics has teamed up with Aon’s Global Construction and Infrastructure Group to publish a new global construction forecast report for 2037. The report will map growth for the top 50 construction markets globally, at a time when climate change mitigation efforts drive up growth in key markets.

The new report, when published in Q12023, will give an overview of the global economy’s health and examine how rising populations and rapid urbanisation in emerging markets are expected to impact growth in key construction markets.

We expect growth of US$5.6 trillion in construction over the 15-year period from 2022 to 2037 – representing a growth of over 60% in the size of the global construction market.

Construction will see a continued shift to emerging markets. The fastest-growing region globally is expected to be emerging Asia, growing by US$4.2 trillion to US$8.5 trillion construction market by 2037.

India is expected to be the fastest-growing major construction market globally and will double its size from 2022 to 2037.

China is expected to contribute US$3.3 trillion of growth to the global construction market in 2037 – over 50% of global growth for construction. Growth in non-residential sectors such as healthcare and biotech will outstrip growth in infrastructure or housing as China’s economy transitions towards a market-led economy.

Rising populations and rapid urbanisation in emerging markets will be key growth drivers for construction. Global population is expected to rise by one billion people, from 7.9 billion in 2022 to 9.0 billion by 2037. Population growth and urbanisation will grow fastest across sub-Saharan Africa.

Latin America is expected to grow at the same pace as North America while Western Europe and the developed economies of Asia Pacific are expected to be the slowest-growing regions.

The construction market in Japan is expected to remain the same size in 2037 as it was in 2022 with growth declining from 2028, as the population shrinks.

The climate challenge for construction will be its greatest opportunity.

Climate change is arguably the greatest challenge for construction. The need to build resilient infrastructure and the race to achieve Net Zero by 2050 will mean huge programmes of infrastructure. Investment in the transition of energy grids to renewable sources of energy and transport networks towards green mobility will remain high growth markets as the US$1.2 trillion Infrastructure Plan in the US and €750 billion Next Generation EU promote growth and recovery from the pandemic.

Current inflationary pressures across economies are expected to largely dissipate starting in 2023 as the effects of an unprecedented surge in demand post-Covid normalise, and supply-chain disruptions are resolved. Headline inflation is not expected to return to pre-pandemic levels until late 2023 while persistent inflation for key construction materials and labour is likely to remain for longer, into the medium term, until supply chain disruptions ease.

With central banks firmly focused on bringing inflation down, the risk of a near-term recession has increased – a global recession is expected to be avoided, but contractions in GDP in both Europe and North America during 2023 are expected. The Eurozone looks particularly vulnerable to any further shocks as the Russia-Ukraine war continues and the German construction market is already experiencing a sizeable downturn this year.

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Author

Graham Robinson

Global Infrastructure and Construction Lead

+44 (0)7843 056580

Graham Robinson

Global Infrastructure and Construction Lead

London, United Kingdom

Graham is the Global Infrastructure and Construction Lead at Oxford Economics.

He is also the Global Business Consultant at Pinsent Masons LLP – the world’s top-ranked firm of lawyers for construction. He has 35 years of experience in the infrastructure and construction sector.

He is one of the world’s leading global construction economists, according to Engineering News Record (ENR) in the US. He leads consultancy assignments and is an author of Global Construction 2030 and many other industry reports and writes regularly for journals and other media.

Graham was previously a Partner and Head of Management Consulting for one of the largest global management and construction consultants and he was Commercial Director of the renowned Centre for Strategic Studies in Construction as a part of the School of Construction Management and Engineering at the University of Reading – a recognised global centre of excellence in construction strategy.

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