AMSTERDAM (Reuters) - Global construction will outpace GDP growth over the next 10 years, with China and India accounting for 38 percent of the $4.8 trillion increase in output by 2020, PricewaterhouseCoopers (PwC) said on Thursday.
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 by 2020, accounting for a fifth of world construction, PwC said, citing a report it sponsored.
Emerging markets, with their fast-growing populations, accelerating urbanisation and robust economic growth, will account for 55 percent of global construction by 2020, up from 46 percent today, PwC said.
The study, conducted by market research firms Global Construction Perspectives and Oxford Economics, forecasts that $97.7 trillion will be spent on construction globally during the next decade and the sector will expand by 5.2 percent on average every year, outpacing global GDP growth.
The construction sector worldwide currently accounts for more than 11 percent of global GDP and the report predicts that it will account for 13.2 percent of world GDP by 2020.
Just seven countries -- China, India, the United States, Indonesia, Canada, Russia and Australia -- will account for 65 percent 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 programmes, 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 will be spent on construction in the U.S. by 2020, with growth averaging 7.8 percent 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 favourable 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, PwC said.
Natural resources will play a key role in the Middle East and North Africa, where $4.3 trillion will be spent on construction across the region over the next decade, representing growth of almost 80 percent to 2020, PwC said.
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.
Infrastructure in Britain will grow by less than 10 percent by the end of the decade, compared with growth of almost 135 percent in Asian emerging markets, the report said.
Editing by Susan Fenton