On your marks.

As we begin the third quarterly lap of 2024, the construction sector in Europe continues to navigate a landscape filled with both risks and opportunities. Despite lingering economic uncertainties, several positive trends provide a foundation for cautious optimism.

Although the industrial and wholesale sectors have faced some setbacks, the overall economic outlook for the region remains promising. While Austria and Germany experienced slight declines in GDP compared to 2Q 2023, all other countries featured in this report experienced positive growth. The Organisation for Economic Co-operation and Development (OECD) projects economic growth across all these countries in both 2024 and 2025, with particularly strong performances expected in Central and Eastern Europe. Hungary, Poland, Romania, and Slovakia are all projected to grow by more than 2% in 2024.

Inflation trends have also markedly improved from the previous year, with the Eastern and Central regions demonstrating notably robust recoveries. This reflects their accelerated recovery path following the Ukraine-Russia conflict, compensating for their greater proximity-driven setbacks and aiming to align with their Western and Southern counterparts in returning to pre-conflict levels. OECD projections for 2024 and 2025 suggest that inflation rates will continue to stabilise, gradually approaching the EU target level of 2% — with Czechia, France, Germany, and Portugal all predicted to report average rates between 2 and 2.5% in 2024.

However, regional disparities in economic performance and sentiment persist. Eurostat's construction confidence indicator (CCI) highlights a divide between the Central and Eastern European regions and their Western and Southern counterparts. The former group faces more significant challenges, reflected in lower confidence scores, while the latter group shows stronger resilience and stability. Spain, for instance, reported a strong CCI figure of 16.6 in May, which decreased substantially in June due to reduced seasonal work expectations over the summer months. Historically, this figure rises again in September.

Despite these challenges, the overall outlook for the European construction industry is positive. Encouraging gross value added figures from various countries, especially Italy, alongside easing inflationary pressures, provide a conducive environment for growth. Investors and stakeholders can look forward to tapping into areas poised for development and stability.

As we look ahead, it's clear that Western and Southern European countries started strong and are currently leading the economic race. However, their Eastern and Central counterparts are catching up, ready to take the baton in this economic relay.

In response to the growing demand for construction services, Gleeds has inaugurated a new office in the Austrian market. This strategic move aims to address the heightened interest in projects in the region.

Each country-specific report following this introduction will delve deeper into the unique market dynamics and provide detailed insights tailored to each nation.