Belgian construction industry set to reach US$94.5bn by 2024
Prior to the COVID-19 outbreak, Belgium’s construction industry was expected to grow by 3.1% in 2020. However, with the emergence of the pandemic and the stringent measures taken by the government to contain the spread of the virus, the construction industry is now set to contract by 4.5% in 2020. The industry is expected to post a recovery in 2021 and grow at an annual average rate of 2.7% between 2021-2024. Consequently, the industry’s output value, measured at constant 2017 US dollar exchange rates, is expected to reach US$94.5bn in 2024, according to GlobalData, a leading data and analytics company.
According to the National Bank of Belgium (NBB), the country’s construction industry contracted by 2.6% year-on-year (YOY) in the first quarter of 2020, and the construction industry is expected to have shrunk further in the second quarter, reflecting the lockdown measures imposed throughout March and April 2020. Construction activities in the country were disrupted as construction companies closed sites in response to the pandemic.
Danny Richards, Economist at GlobalData, comments: “Since May 2020, work has resumed on many projects including the renovation of the Léopold II tunnel. The Flemish ministry of Mobility and Public Works announced plans to invest EUR2.2 billion €2.2bn (US$2.5bn) on 924 minor and major projects this year. Investments on these projects will help in boosting the construction industry and generating employment, thereby contributing to the overall economy.”
Residential construction was the largest sector in Belgium’s construction industry in 2019, accounting for 45.3% of the total industry value that year. Investment in the sector is expected to remain weak this year due to the disruptions caused to the construction activities coupled with declining consumer confidence owing to rising unemployment. The containment measures are expected to weigh on employment in the country, which will affect household income growth, thereby constraining demand for new housing, despite low interest rates.
Richards adds: “The temporary disruption to construction activities will affect the progress of infrastructure projects, and projects located in strategic economic zones could be postponed. However, the government’s investment in transport infrastructure under the mobility and infrastructure plan, as well as development of energy infrastructure, particularly the focus on the development of renewable energy, will support market’s output over the next few years.”