Construction Industry Growth Trends
The construction industry growth forecasts in Spain through 2018 are positive. Gone are the days of falls during which the market was driving out many companies that had been vital the years prior to the crisis of 2008. At least, in macroeconomic terms, Spain is flourishing again; that is, employment rates are rising. Not only in the service industry, which is the most abundant, but also in the construction sector. So much so that new real state agencies have emerged in recent months and have positioned themselves among the five largest developers in Spain.
GDP GROWTH IN 2017
We should mention that GDP is the Gross Domestic Product of a country. It reflects the monetary value in the production of goods and services in a period of twelve months.
In the last trimester of 2017, quarter-on-quarter GDP increased by 0.7%. On the one hand, national demand slowed its growth down compared to the three previous months (July, August and September), both in terms of private consumption and group investment. On the other hand, investment in residential construction increased again, according to Funcas data.
Moreover, exports were higher than imports despite the decline experienced in the last months of the year. Service exports saw a considerable decline in Catalonia, due to a situation of uncertainty. That is, fewer tourists traveled to the region, compared to the number of people that usually go on average and in conjunction with the rest of the country. The Canary Islands also had a slight decrease. Overall, in 2017, GDP grew by 3.1%, down 0.2% in comparison with the previous year.
PROVISIONS FOR THE NEXT TWO YEARS
If the trends do not alter, it is foreseen that in the next two years (2018-2019) the economy will continue to grow in our country, but not at the levels of 2017. That is, unemployment will continue to decline compared to recent years. By 2018 it is expected that jobs will increase. Particularly, there will be 850,000 new workstations, producing a growth of 2.8%, 0.3% down on the previous year. This is due to the evolution of private consumption, owing to the exhaustion of demand in the harshest years of the economic crisis that we have faced in the last decade.
Public consumption will also fall due to the six months extension that the general budgets of the State have suffered, approved a few days ago. Investment will increase in the building industry thanks to its recovery in recent months.
GDP is expected to grow by 2.4% in 2019. The decrease is due to the withdrawal of the employment incentive measures of the European Central Bank (ECB). According to a report from FUNCAS, by the end of next year there will be almost 20 million workers in Spain, that is, 2.1% more than in 2018 and some 600,000 fewer than before the crisis. Therefore, if these forecasts are met, the unemployment data would improve once again.
INCREASE IN CONSTRUCTION INVESTMENTS
Investments in the construction industry in Spain will grow by 4.6% during 2018,0.2% up on the previous year, according to a report by the Institute of Economic Studies (IEE). This statement shows that investment increased by 4.4% in 2017, compared to 2016. Even though investment in construction has slowed down in the third quarter, there is no need to be alarmed because the trend will remain positive.
They also inform that the growth in the construction industry is due to the real estate market regeneration, the creation of new jobs and low interest rates.
OTHER INTERESTING DATA
According to the Real Estate Observatory, GDP growth between 2018 and 2020 is estimated to be 2.3%. Regarding the triennium of 2015-2017 there is a decrease in growth because during those years it was higher than 3%. This data doesn’t suggest that we are going to start another economic crisis, because after several years of continuous growth, the GDP returns to normal levels (between 2 and 3%) so that inflation does not soar. The construction industry will have a considerable decrease of up to 2.5% in 2018. In contrast, the forecasts for 2019 and 2020 mean to grow back to over 4%, as in 2017.
Thus, we certainly know what will happen in the coming months: economic growth will continue in the future. The figures are clear. It has been proven in three different portals and all of them have something in common: the construction industry is on the rise.
Gone are the dark days of the economic recession that began in 2008-2009 and intensified itself much more than expected due to the collapse of employment or the disappearance of many companies that were vital during the economic boom. Nowadays, new firms have taken the lead as the main promoters. We will see what happens at the end of this decade, but forecasts, at least, are positive.
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