Central Europe Construction Market Report 2Q 2023
Slovakia
Local economic indicators
Real gross domestic product (GDP) growth remained positive in 2022 at 1.7%. The International Monetary Fund (IMF) forecasts GDP in 2023 to reach a minimum of 1.3% before experiencing a recovery in 2024.
A peak in inflation to 15.4% was seen in February, recovering slightly in March to 14.8%. The IMF forecasts the annual rate at 9.5%, leaving expectations for several months of improvement remaining.
Construction materials
The industrial producer price index below showed some recovery in 4Q 2022, but the end of 1Q 2023 produced significant increases in heating, ventilation and air conditioning (HVAC), electrical distribution and glass. Clay building materials, steel tubes, structural metal products and wiring produced small recoveries in the same period.
Similar fluctuations, where clay and steel experienced savings and electrical had a significant uplift, can be seen in the local FIDIC method price review indices:
Contracts
As the cost of project financing continues to rise, pressure from banks — and subsequently investors — to fix the price at the outset of a project is a predicament increasingly faced by suppliers, due to ever-increasing interest rates lowering demand for new projects.
Market outlook
The automotive industry has postponed projects due to the transition to electromobilisation needing re-design to adapt to new requirements.
Planned investments resulting from the EU-funded Recovery Plan are also seeing some delays in commencement, leaving contractors anxiously waiting.
The construction confidence indicator made a significant recovery in April 2023 (+0.5 points), a first since August 2018. This improvement is greatly attributed to optimism for new work in the coming three months reported at 15 points in April's survey results. In general, expectations of increasing prices remain the biggest factor limiting building activity, as reported by the Eurostat construction survey.
Gleeds advises regular project budget updates that take into account recent market pricing and local risk factors which may impact project programmes and costs. Risk analysis studies are recommended to better evaluate and prepare appropriate contingencies for your particular project conditions and risk exposure.
Eurovea, Bratislava, Slovakia — Gleeds provided Quantity Surveying/Cost Management services.
