Construction growth to “power global economy”
04 October 2021
Global construction output is expected to grow by 6.6% in 2021 and 42% by 2030, driven by government stimuli and the demand for residential construction, according to a new report by Marsh and Guy Carpenter, both businesses of Marsh McLennan.
The report, Future of Construction: A Global Forecast for Construction to 2030, written with Oxford Economics, looks at construction as the industry recovers from the effects of Covid-19 and the key drivers shaping its future over the next decade.
Predicted average annual growth in construction is 3.6% per annum – faster than either the services or manufacturing sectors. Global infrastructure construction is forecast to grow by an annual average of 5.1%.
Graham Robinson, global infrastructure and construction lead at Oxford Economics, said, “It’s not surprising that construction is expected to power the global economy over this next decade, considering the unprecedented nature of the stimulus spending on infrastructure by governments and the unleashing of excess household savings in the wake of Covid.”
As the sector grows, however, so too does the risk of greater pollution and waste, the report warns. Construction and the wider built environment currently accounts for around 40% of the world’s global greenhouse gas emissions.
Climate change and the race to net zero are arguably the greatest challenges that face the industry, according to the report.
The need to radically reduce the amount of carbon embedded in new construction will drive the growth of a deconstruction industry that reuses huge existing urban stockpiles of construction materials.
The reports says that in 2020, environmental, social, and governance related capital for infrastructure grew 28%, largely due to a flow of fundraising into sustainability-related strategies.
As significant equity is usually allocated to infrastructure by major construction companies and developers using their own corporate balance sheets, opportunities exist for those companies that develop new technologies, designs, and processes.
Richard Gurney, global head of construction, Marsh Specialty, said, “Climate change and the ESG [Environmental, social and corporate governance] agenda – and the risks and opportunities they present – are among the biggest challenges the global construction industry faces over the next decade.”