Oxford Economics has forecast that global construction activity will jump to US$5.8 trillion ($6.9 trillion) by 2030, despite recent impacts caused by the COVID-19 pandemic.
According to a new report by the global economic firm, construction activity will rise by US$1.5 trillion within the next 10 years.
Two-thirds of the growth is expected to occur in China, the United States, India and Indonesia.
The Oxford Economics report also expects total construction output in the US, United Kingdom, Canada, Australia and New Zealand to reach nearly US$1.3 trillion by 2030.
According to Independent Technology Intelligence Services, the report is based on the conditions that a vaccine will be introduced by early 2021, and that there is no second wave of COVID-19 cases globally.
Despite the potential of a future boost, Australia’s construction industry has faced a number of hurdles this year, with the Australian Industry Group and Housing Industry Australia’s Australian Performance Construction Index (Australian PCI) falling to 37.9 in August 2020, the 24th consecutive month of contraction.
BIS Oxford Economics, an Australian subsidiary to the Oxford Economics, expects growth in construction work done in Australia to stay negative in the 2021 financial year.
BIS Oxford Economics Associate Director of Construction & Infrastructure, Adrian Hart, told Quarry that engineering construction activity was likely to cushion the sector in the coming years, due to a spike in work on major infrastructure projects driven by government stimulus packages and the private sector, which is offsetting significant declines in residential and non-residential building.
“The engineering construction market is actually recovering at the moment after five or six years of decline following the resources investment bust,” he said.
“Engineering construction activity is being supported by big transport projects and mining projects, which we’re anticipating will continue, mainly because the price of iron ore is underwriting substantial sustaining capital projects.
“To even sustain projects at current rates they need massive levels of investment, and that’s what they’re doing right now.”
According to Hart, Australia is likely to see a bounce back in non-residential building activity well before the residential market.
“The residential market is going to be quite weak in terms of new construction, even with government subsidies and support” he said. “With population growth a key driver, it will take time for this sector to recover.”
Hart said Victoria is expected to have a sharper drop in total construction activity than other states over the next two years, which is in part due to the lockdown but also due to the state already operating with a high level of engineering projects and being the largest state in terms of residential building work done.
“Because they’re already operating at such a high level, they’re not going to get the growth if you like from the engineering market as much as other states,” he said.
“Furthermore, the sharp correction in housing activity is likely to disproportionately impact on Victoria given that’s state high share of net overseas and interstate migration, both of which have been crunched by the response to the pandemic.
“For those reasons, the downturn in Victoria’s construction market over the next few years is probably going to be larger than other states.”