Construction sector loses approximately 2% in 2016, down to 9.6 bn euros (survey)

The construction sector lost approximately 2% in 2016, down to 9.6 billion euros, while the number of employees increased by about 5%, according to a relevant survey issued for AGERPRES on Monday. 

Although the gross domestic product rose by 5.8%, the construction sector recorded a loss of 5.7% in the first seven months of 2017. According to the survey conducted by Euler Hermes, the underperformance refers to the serious under-financing of the infrastructure sub-sector. The share of infrastructure in the construction sector was higher than 61% in 2015, compared with 57% in 2016 and 2017. 

"At a macroeconomic level, we see a growing trend, and companies generally report growing business. However, the low expenditures in infrastructure start to negatively affect certain sectors. Also, if we look beyond the robust consumer demand, we see a trend of rising inflation, putting pressure on profit margins, affecting working capital and liquidity. All that may signal an increase in payment delays in the coming months, and will require a higher level of financial risk monitoring by companies," say the survey's authors. 

Engineering infrastructure works lost 25.7%, non-residential works went down by 11.4%, partly offset by 81.2% residential growth in the first 7 months. 

Construction sector accounted for 5.6% of the gross domestic product in 2016, but is projected to go down to 5% in 2017. 

As for private projects, residential and office sub-sectors trigger the increase, while the commercial development of malls stagnated in 2017. 

Office demand is pushed forward by IT and outsourcing centers, while the increased consumption also fueled the residential sub-sector (12,000 dwellings in 2017 in Bucharest alone). 

The residential sector continued to develop and the largest increase in square meter prices in the last 12 months was recorded in Bucharest (almost +13%) and Cluj (up 12%) from 1,240 euros / square meter and 1,330 euros / square meter respectively. 

The lack of qualified staff explains the poor performance of both building material producers and traders, as well as of builders.