Central Eastern Europe Construction Market Report 4Q 2023
Poland
Local economic indicators
Poland’s gross domestic product (GDP) in 2Q 2023 showed negative growth of -1.4% (seasonally adjusted; constant prices) in a year-over-year (YoY) comparison, attributed to reduced domestic growth rates as reported by the local statistical office.
A positive takeaway is that gross value added in construction resulted in 0.5% growth YoY. The Organisation for Economic Co-operation and Development (OECD) maintains its original forecast for the year at 0.9% and 2.1% in 2024.
The most recent data available on Statistics Poland shows inflation at 8.2% in September, continuing the country’s recovery period from its annual peak in February at 18.4%. The Eurostat Harmonised Index of Consumer Prices (HICP) has produced similar results, with a peak in February (17.2%) and a steady decline to September’s 7.7%. The OECD forecasts inflation to continue declining in the second half of the year, reaching a quarterly rate of 8.2% by year’s end.
Construction materials
The industrial price index table, located on the right-hand side, reveals that some production prices have increased in recent months. Recent election results have not produced the desired inflation recovery, minimum labour wages are due to rise in January 2024 and other pressures on consumer spending will likely have an upward impact on production pricing in the short-term.
Poland has an interesting advantage in that their natural gas pricing has been stable. In addition, the local currency has been recovering strength against the US dollar, potentially easing the international effects of the recently started war in Israel.
Market outlook
The general construction confidence indicator has steadily declined in 3Q, reported at -10.4 in October. However, it saw positive results amongst companies larger than 250 employees, reported at 8.1 in the same month.
The general economic situation, current domestic order books and forecasted order books all reported positive numbers, reflecting the positive gross value add of construction in the national GDP figures. While these responses are encouraging, challenges remain, such as rising prices, skilled labour shortages and labour costs.
As always, Gleeds advises regular project budget updates that take into account recent market pricing and local risk factors which may impact project programmes and costs. Undertaking risk analysis studies enables better evaluation and preparation of appropriate contingencies for your particular project conditions and risk exposure.
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