Construction News - International Construction Industry
Construction News
UmweltBau GalaBau Bau Magazin

Uncertain prospects for Italy’s construction market

VERONA/ITALY, March 27, 2013 - In 2013 Italy desperately wants to prevent company closures while waiting for measures to re-launch the sector.

The construction world and manufacturers of sector machinery are expecting ups and downs for 2013. It seems to be evident that nowadays even analysts are unable to foresee when this crisis will come to an end. The construction boom we all experienced in the years immediately following introduction of the Euro was considered a golden age compared to now. According to the latest CECE forecasts, a recovery of the construction industry before 2015 seems to be unlikely. Until last year equipment manufacturers were able to look at the rest of the world with optimism, but during recent months were forced to reconsider due to latest developments and progress.

Returning to Europe, the problem seems to be that all building and construction sectors are facing hard times: CECE again suggests that overall growth in new residential construction will see a downturn of 1.1% over the course of this year. More optimistic forecasts focus on renovation of existing residential property, which should maintain current levels and may even see an increase between 2014 and 2015. Again with reference to the overall European situation, forecasts for non-residential buildings and the civil engineering sector also sound negative. There are a couple of reasons: The slow-down and even blocking of public investments for budget reasons; cuts to European Convergence Funds (especially in Eastern Europe). Those had in recent years encouraged the implementation of significant public infrastructure such as roads, railways, hydro and electric plants. Drawing an overall picture, there are remarkable differences between countries in central and northern Europe and those in the south (which, for completeness, include Ireland), which are experiencing a much deeper crisis. Spain, Portugal and Italy are the countries where the construction market is experiencing most difficulties (and for 2013 ANCE estimates a further downturn in construction investments of 3.8%). In response Italian industry associations, faced by the substantial absence of government action, organized a "Rage Day" in Rome. A protest event which visually highlighted the closure of 40 thousand companies and the loss of 360 thousand jobs since the beginning of the crisis by laying down thousands of yellow helmets to the ground.

The market naturally reacts to the same dynamics: CECE suggests that approximately 105,000 units were sold in Europe in 2012 with a 3% downgrade compared to the previous year. This tendency worsened in the last quarter by 11%. In Italy, UNACEA and ASCOMAC data outline the decline in 2012 as 31%. Markets in France, Germany and - to a lesser extent - Great Britain remain steady. Scandinavian countries, Turkey and especially Russia even recorded +25% in sales.

2013 is expected to be another year of uncertainty while waiting for economic recovery in Europe to start. Moreover there is a growing awareness that economic austerity policies, while certainly necessary to avoid disastrous defaults, must now be joined by support policies that take into account the vital need for a genuine economic recovery. The alternative could be a self-perpetuating recession prompting even further austerity measures in the wake of falling GDP and the consequent growth in GDP-Debt ratio.