Market environment impacted by COVID-19, war in Ukraine and inflation
The construction sector developed positively in most regions in 2022. However, there was a slowdown in growth in most markets following the COVID-19-related catch-up effects in the previous year. Additionally, growth was also hampered by the effects of the war in Ukraine, the record levels of inflation and increased interest rates.
In November 2022, the construction market research network Euroconstruct forecasted an increase in building construction for Europe in 2022 of +3.6%, slightly higher than the previous estimation made in mid-2022 (+2.2%). At 2.6%, new construction was seen by the forecast as growing less strongly than renovations (+4.5%). Non-residential construction (+1.9%) recorded weaker growth than residential construction (+4.6%). Countries that are important to Geberit in terms of sales continued to experience solid to very good development in 2022: Italy +15.6%, Poland +5.3%, the Netherlands +4.3%, United Kingdom +4.1%, Finland +4.0% and Sweden +3.5%. In contrast, the DACH region (Austria -0.2%, Germany -0.4%, Switzerland -2.3%) and two Nordic countries (Norway -1.5%, Denmark -0.6%) posted negative growth rates. According to the figures in the October 2022 edition of the IMF World Economic Outlook, a significant share (around 20%) of the global growth in economic performance originated in Europe, with a GDP growth rate of +2.3%.
Of the total European construction volume of EUR 1,900 billion in 2022, around 80% was generated by building construction. The ratio of residential to non-residential building construction remained the same at around 60 to 40 percent. New construction as a share of total building construction continued to lag behind the renovation business in 2022.
According to estimates by the Bureau of Economic Analysis, gross domestic product (GDP) increased by +2.1% in the US (previous year +5.9%). Investments in building construction increased by +11.8% (previous year +10.3%) according to figures from the United States Census Bureau. Within building construction, investments in residential construction increased by +13.8% and in non-residential construction by +9.8%. The healthcare/hospitals and schools/universities segments, which are important for Geberit, developed with +8.5% and with +0.6%, respectively, more positively compared to the previous year (+1.6% and -8.7%, respectively).
In the Far East/Pacific region, economic growth amounted to +3.5% in the reporting year, slightly above the global economic development of +2.8%. With a share of around 45%, the largest proportion of global economic growth again originated from the Far East/Pacific region. At +3.2%, China saw significantly lower growth compared to the previous year (+8.1%) due to the pandemic. This figure is also much lower than the average of recent years.
In the Middle East/Africa region, economic growth in 2022 was +4.5%, slightly below the previous year (+5.5%) but well above the average of recent years.
(The aforementioned figures covering the world economy and the performance of the Far East/Pacific and Middle East/Africa regions were published in the October 2022 edition of the IMF World Economic Outlook)