Tuesday, 30 July 2013 21:15

Growth in construction industry remains muted

Industry Insight's latest report has indicated that investment growth in the construction industry is expected to remain muted, as growth is expected to moderate from an estimated 3,2% in 2012 to 1,9% in 2013, improving by between 3% and 4% in the next couple of years, supported mainly by some recovery in the property and commercial market. Investment growth in the civil sector is highly sensitive to spending by government and based on the 2013/14 budget, not expected to increase in real terms.

The larger contractors are seeking opportunities in Africa and elsewhere, medium size contractors are ideally placed to maximise opportunities presented domestically, where contracts have been reduced in size.

The slowdown in the South African economy does not bode well for investment in construction, as it impacts on business confidence locally and reduces available funding for government to impliment infrastructure budgets.

South Africa finds itself in the precarious position, challenged by a twin deficit. On the one side, expenditure is racing ahead amidst poor revenue growth (expenditure increased by 22% in April 2013 compared to revenue growth of 0.6%), while weak global conditions has affected exports, creating a trade deficit. The IMF yet again downscaled SA growth outlook to 2%, increasing the risk of a further sovereign debt downgrade, because SA will find it increasingly difficult to manage its current account deficit.

Information Provided by Industry Insights