Ukraine war to hit European construction
19 April 2022
The construction industry in Eastern Europe is set to fall by 3.4% in 2022, as a direct result of the ongoing conflict between Russia and Ukraine, according to data and analytics specialist GlobalData.
In a new report, GlobalData says economies with strong links to Russia’s will also be most significantly affected, but all neighbouring countries will feel the ripple effects of the conflict, with higher prices for energy and raw materials, as well as a loss of confidence in the region from project investors.
In the report, Construction Market Size, Trends and Growth Forecasts by Key Regions and Countries, 2022-2026, GlobalData said Russia’s construction market was likely to fall by 9.2% in 2022, due to the wide-ranging sanctions imposed on the country by Western governments.
The worst affected market, of course, will be that of Ukraine, which is forecast to fall by 69.1%.
Joel Hanna, Economist at GlobalData, said, “Construction in most countries in Eastern Europe is likely to be affected by rising energy prices, exacerbated supply chain disruptions and local currency devaluations owing to weakened investor confidence in the region over the uncertainty of the Russia-Ukraine crisis. Moreover, household income squeezes are likely to weaken demand and undermine growth in commercial construction projects, while rising construction costs will push housing prices higher, reducing demand for residential construction.”
He added, “Construction costs in Eastern Europe are already rising owing to the post-pandemic demand rebound and supply-side shortages pushing up raw materials prices and shipping costs. The crisis in Ukraine adds significant upward pressure to construction costs in 2022, which will eat away further at project profitability, dampening the outlook for construction activity in the near future.”