Poland: Promising building start in 2023, but contraction ahead
Polish contractors started the first half of 2023 with a growth rate of 1.3% compared to the same period in 2022. Order books are still well filled, with 8.6 months of work and have even increased slightly. The higher volumes are driven by the infrastructure sector, which showed an impressive increase of almost 10% in the first half year. We expect that the growth rate of the infrastructure sector will decrease as projects under the previous EU financial perspective will end in 2024. The EU Recovery and Resilience Facility has been delayed due to a judiciary dispute, but this should boost the construction industry once implemented. The building sector is performing less. Building permits for residential buildings decreased by 40% YoY in the first quarter of 2023. Overall, we anticipate that total Polish construction output will still marginally increase by 0.5% in 2023.
France: Zero growth in 2023
After a 2.5% increase in French construction volumes in 2022, growth increased further in the first half of 2023 by 0.5% YoY. However, French contractors are slowly becoming more pessimistic. In August, the French construction confidence index (EC survey) was marginally negative, and order books are slowly becoming less well-filled. French contractors now have 7.8 months of work on average in their backlogs compared to 8.1 months in the first quarter of last year. The issuing of building permits for new houses is also decreasing, but at a slower pace than in many other countries. Material and labour shortages are less of an issue but are still relatively high. Government measures such as MaPrimRénov have supported renovation and sustainability activity. For 2023, the budget of this scheme has increased from €2.4 to €2.5 billion but remains lower than the €3.1 billion allocated in 2022. Overall, we expect that the French construction output will stabilise in 2023 and decrease by -0.5% in 2024.
Turkey: uncertainty trumps
In August, the Turkish construction confidence indicator (EC survey) showed a negative reading of -13.0. However, order books recuperated slightly after the lowest level measured since 2011 was recorded in the first quarter of this year. Fewer contractors complain about low demand, and the issuing of building permits is pretty much stable.
The earthquakes at the beginning of this year have caused massive damage to over 300,000 buildings. Our expectation is that reconstruction efforts in the form of higher public investment should generate growth in the construction sector from 2024. This will take place after a further small decline in construction output in 2023, marking six consecutive years of declining building output in Turkey.
