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Swedish construction to record positive growth

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World Cement,

A recent report by Timetric’s Construction Intelligence Centre (CIC) has found that the Swedish construction industry is set to expand over the forecast period (2015–2019) to value US$68.3 billion, with residential and commercial markets to record the fastest growth.

According to the report, increasing public and private sector investments, disposable income, as well as growing population and urbanisation, will provide an extra boost for Sweden’s construction industry. It is expected to record a 2.49% compound annual growth rate (CAGR) over the forecast period, down from 3.37% during the review period. As a result, the industry’s value is forecast to increase from US$60.3 billion in 2014 to US$68.3 billion in 2019 in real terms. However, weak economic conditions, due to uncertain economic developments in the Eurozone, and sluggish economic growth in neighbouring countries such as Norway and Finland, will impact on the industry’s development.

Residential construction was the largest market in the Swedish construction industry accounting for around 46.0% of the industry’s total value in 2014. The decline in mortgage interest rates in combination with an increase in disposable income and better access to credit resulted in an increase in demand for housing and a review-period CAGR of 3.33%: the residential market rising from US$24.6 billion in 2010, to value US$29.5 billion in 2014. The market will continue to expand as a result of low mortgage interest rates, a rise in disposable income, urbanisation and improving labour market conditions.

Commercial construction accounted for a share of around 17% of the industry’s total value in 2014 and was the second-largest market in the overall construction industry. The market rose from US$9.8 billion in 2010 to value US$11.0 billion in 2014, posting a real CAGR of 3.4%. The rise in disposable income positively affects consumer confidence, with the latest figures from the Central Bank showing Sweden’s retail trade sales volume index having increased by 4.4% in the first half of 2015 compared to the same period last year. The market is expected to continue to flourish, driven also by investments in office and retail buildings, as well as the tourism sector.

Adapted from press release by Joseph Green

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