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Global Panorama: Europe

World Cement,

Europe – West and East

In March 2015, Ernst and Young (EY) commented that after a year of tentative recovery in 2014, the Eurozone, driven by sharply lower oil prices and quantitative easing, will help GDP growth accelerate from 0.9% in 2014 to 1.5% this year and then to 1.8% in 2016. Growth will still only be 1.6% in 2017 – 19 as it will be held down by a number of structural constraints. These figures are in line with other reports.

Forecasts for the cement markets this year in the major Western European markets are mixed, according to IA Cement. There will be declines in cement consumption in France (down 1.2%) and Italy (down about 2.5%), but positive increases in Spain, the UK, Ireland and Greece. The strong housing markets in Norway and Sweden indicate that there could be solid growth this year. The European Commission is said to foresee a substantial recovery in real construction investment in many of its Member States, mainly in Spain, Portugal and some Eastern European countries that were badly hit by the fall in the construction cycle after the 2008 crisis.

 Analysts in Poland are predicting a record growth of 8% this year in the building market. The Polish construction sector will gain momentum from EU funds that will contribute to a growth of 6 – 8%. Visible growth is expected in 2016 – 2018. Cement growth could be about 2 – 3% this year. Reports on the economy of the Czech Republic suggest that its fate remains linked to German demands for exports. GDP growth is predicted to reach 2.6% this year and then grow to 3% in 2016. In Romania, there are reports that waste-processing plant construction is recording a healthy growth this year. A recent example is the e9.3 million investment by Lafarge for a waste co-processing unit at its Medgidia plant. In addition, as mentioned in World Cement in January, the government has plans to construct 656 km of new highways by 2030.

Hungary grew at the fastest pace in eight years in 2014, as the economy expanded by 3.6%. Experts of the Hungarian Government and independent observers agree that, economy-wise, 2015 will be weaker than where the growth of 2.00 to 2.6% is expected. Falling world market oil prices might accelerate growth – possibly by 0.6%.

Since the beginning of hostilities in the Crimea region, market confidence within Russia has deteriorated. It is unlikely that the US and EU sanctions applied to Russia will be lifted in the foreseeable future. Euler Hermes forecasts a contraction in the country’s economy of about 5.5% this year, as opposed to the country’s economic minister, who has predicted a smaller reduction of about 3%. Whatever the right figure, a significant decline in investments and FDI is expected this year.

Written by Paul Maxwell-Cook. This is an excerpt from World Cement's July 2015 issue. Subscribers can read the full issue by signing in, and can also catch up on-the-go via our new app for Apple and Android. Non-subscribers can access a preview of the July 2015 issue here.

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