MercoPress. South Atlantic News Agency

Global construction to outpace GDP growth in next 10 years with China and India leading

Seven countries will concentrate 65% of growth to 2020

Global construction will outpace GDP growth over the next 10 years, with China and India accounting for 38% of the 4.8 trillion US dollars increase in output by 2020, PricewaterhouseCoopers (PwC) said this week.

After overtaking the US as the biggest construction market in 2010, China's construction sector will more than double in size to 2.5 trillion USD by 2020, accounting for a fifth of world construction, PwC said, citing a report it sponsored.

Emerging markets, with their fast-growing populations, accelerating urbanization and robust economic growth, will account for 55 percent of global construction by 2020, up from 46%, according to PwC.

The study, conducted by market research firms Global Construction Perspectives and Oxford Economics, forecasts that 97.7 trillion USD will be spent on construction globally during the next decade and the sector will expand by 5.2% on average every year, outpacing global GDP growth.

The construction sector worldwide currently accounts for more than 11% of global GDP and the report predicts that it will account for 13.2% of world GDP by 2020.

Just seven countries: China, India, the United States, Indonesia, Canada, Russia and Australia, will account for 65% of the growth in global construction to 2020, PwC said.

Spending on construction in India will overtake Japan, which faces the lowest construction growth among developed nations, by 2018, when India will become the world's third-largest construction market, PwC said.

Construction in most developed countries will be constrained by large public deficits, austerity programs, slow population growth and limited economic expansion. The United States will be the exception thanks to its growing population, PwC said.

An estimated 14.5 trillion USD will be spent on construction in the US by 2020, with growth averaging 7.8% per year over the next five years, driven by residential and non-residential markets, the PwC-sponsored report said.

But years of underinvestment in U.S. infrastructure are unlikely to come to an end soon given the swelling public sector deficits unless more private investment is used in procurement, the report added.

Canada and Australia will also lead construction growth in developed countries, boosted in particular by demand for natural resources and favorable demographics, PwC said.

The combined growth in construction in Canada and Australia will almost equal growth in the entire Latin American construction market, including Mexico, Brazil, Argentina, Chile and Colombia, indicating its less bright prospects.

Natural resources will play a key role in the Middle East and North Africa, where 4.3 trillion USD will be spent on construction across the region over the next decade, representing growth of almost 80% to 2020, points out PwC.

The outlook is less rosy for France, home of the world's largest public works group Vinci and largest cement maker Lafarge, as well as other Western European countries, which are set to register little construction growth.