Get ready for action.

As the first quarter of 2024 unfolds, the construction sector continues to seek stability and opportunity amidst ever-shifting economic realities. While uncertainties persist, encouraging trends offer a basis for cautiously optimistic decision-making.

With its 2023 gross domestic product (GDP) figures, the Organisation for Economic Co-operation and Development (OECD) painted a picture of overall growth across the region, albeit with slight declines reported by Czechia, Germany and Hungary.

While some headlines hinted at recessionary concerns, a deeper examination of the data reveals pockets of resilience. Germany's construction sector is a fitting example of just such resilience, growing positively in 2023 despite a fall in overall GDP. Looking ahead, the OECD is also predicting economic expansion across the whole region in 2024, with the largest levels of growth predicted in Central and Eastern areas.

In contrast to the relative stability shown in GDP, inflation experienced a downward trajectory across the entire zone in 2023, with Romania reporting the most significant decline of 16.2%. OECD forecasts for 2024 show inflation returning to levels more in line with those observed in 2021, before the disruptions caused by the Russia–Ukraine war and the subsequent inflationary pressures experienced.

Despite these positive regional trends, Eurostat's January 2024 construction confidence indicator (CCI) revealed a notable geographical divide. Central and Eastern European nations (Czechia, Germany, Hungary, Poland, Romania, and Slovakia) reported a collective average score of -15.9, while their Western and Southern European counterparts (France, Italy, Spain, and Portugal) held a stronger -1.55 average.

This divergence in the CCI and the previously mentioned GDP forecast/inflation trends for 2024 between the two regions can be attributed to the varying degrees of uncertainty experienced stemming from their proximities to the conflict. Western and Southern European countries, having experienced lower levels of uncertainty, have been able to rebound to pre-conflict levels over the course of 2023. Conversely, Eastern and Central European nations, grappling with more pronounced impacts, are anticipated to achieve similar recoveries in 2024.

While challenges persist, the 1Q 2024 landscape reveals promising trends in the European construction industry. By understanding how the stage is set, investors can take action on sectors slated for growth and stability while scripting their own pathways to success in this dynamic market

Each subsequent country-specific report will delve deeper into the nuances of its respective market, providing insights tailored to its unique dynamics.