In Spring 2019, prior to the publication of the 2019 Summer EECFA Construction Forecast Report, the European Commission released its forecast for the economic prospects for EECFA member countries. Here is a summary of the main changes in prospects between Autumn 2018 and Spring 2019.
Written by Tünde Tancsics, EECFA Research, ELTINGA
Economic outlook is still better in the eastern region of Europe than in the rest of the continent, though it has slightly worsened in many countries of the EECFA region between Autumn 2018 and Spring 2019. The only exception among EECFA countries is Russia whose prospects have improved, as well as Hungary (covered by Buildecon in Euroconstruct) with almost 0.4 percentage points.
As Chart 1 shows, GDP growth in the eastern region is higher than the EU average, Turkey excepted where forecasted average annual GDP growth for 2018-2020 remains under 1.5%. As per data by the European Commission, economic prospects are the best for Hungary and Serbia that may see an increase in GDP by more than 3.5% annually between 2018 and 2020.
We have also examined Gross fixed capital formation increase in EECFA countries, in Euroconstruct member Hungary and in the EU. Chart 2 indicates that expected GFCF growth – as in case of GDP – is also higher in most EECFA countries. Moreover, the advantage of Serbia, Croatia, Hungary, Slovenia and Bulgaria is even bigger than the one experienced for GDP. GFCF prospects have greatly declined for Romania; average annual GFCF growth rate for 2018-2020 has shrunk close to zero by Spring 2019 from more than 5% in Autumn 2018. However, among EECFA countries Turkey is the only one where GFCF is set to decrease in 2018-2020.
Hungary is still leading in GFCF prospects with a nearly 10% projected annual growth rate. Slovenia ranks second and Serbia lines up third with both having an 8% growth rate. Hungary has come first in terms of predicted growth of construction investment (15%). Construction’s share in total investment in EECFA countries is between 57% and 65%, with Turkey having the highest rate. Romania also has a high rate of as much as 64%.
For construction segment level forecast, please check our reports that can be purchased on eecfa.com