According to CPA’s updated projections, the mounting price pressure encircling labour shortages, soaring material costs, sizable energy bills and the Ukraine war combined jeopardise the construction industry’s growth, especially in the final months of 2022.
The pipeline of work and persistent demand should keep the industry buoyant at least through the third quarter, with an expansion of 2.8% projected for 2022, in comparison to the 4.3% growth that was estimated three months ago by the CPA.
The CPA’s report reveals, “The soaring energy prices and product scarcity rooted in the Ukraine war will create a deep impact on imported products, including aluminium and steel and also the locally acquired products such as cement and bricks.”
Noble Francis, the Director of Economics for CPA said, “Inflation would have an increasingly depressing impact on the industry in the long term. The continuation, or potential escalation, of conflict in Europe, presents an existential risk.”
He further added, “Specialist sub-contractors are feeling the effects first, particularly those working to fixed-price contracts.”
“For future projects, contractors will be forced to reprice, add fluctuation clauses and introduce risk-sharing arrangements to deal with the uncertainty over potential cost inflation.”
As per the CPA report, although some segments of the sector are set to see significant growth, distinctly the industrial side, whose output is anticipated to rise by 9.8% in 2022 followed by growth of 9.3% in 2023.
However, growth in the private housing construction sector is expected to slow to 1% in 2022 and 2023. The CPA report added, “There will be questions over consumer confidence in the long term, but resilient demand should continue to hold in the coming months.”
