Western Mainland Europe Construction Market Report 2Q 2023
Portugal
Local economic indicators
Statistics Portugal (INE) reported that Portugal closed 2022 with an overall positive gross domestic product (GDP) growth rate at 6.7%, slightly better than 2021, recorded at 5.5%. Provisionally, 1Q 2023 is reported at 2.5%, with the International Monetary Fund (IMF) forecasting GDP growth at 1%.
INE showed 2022 annual inflation at 9.6%, in steady decline since its peak in October 2022 and recently reaching 4% in May. The Eurostat Harmonised Index of Consumer Prices (HICP) has also been consistently falling since October, most recently down to 5.4 in May.
The (IMF) has forecast overall 2023 inflation to reach 5.7%, implying that Portugal has exceeded this expectation.
Construction materials
Some price decreases have been seen in structural metal products and electrical distribution since December. Other price changes are shown in the table below:
Market outlook
Construction confidence was reported at -0.5 in May, a continuing negative trend since March 2022. Only April 2023 had a positive figure of 0.4 although, interestingly enough, work expectations for the next three months is a positive figure at 7.8. Price increases are expected (16.6) as are continuing labour shortages (31.8).
The tourism, hospitality and retail sectors are recovering at a good pace, representing an important driver for construction activity in Portugal. However, between golden visa incentives and changes in demand, projects in the residential sector continue to be on hold.
The data centre sector in Portugal is growing, with a positive outlook for the construction industry. Believed to reach over €500 million by 2025, it is anticipated that this sector will create more than 6,300 jobs.
As always, Gleeds advises regular project budget updates that take into account recent market pricing and local risk factors which may impact programmes and costs. Risk analysis studies are recommended to better evaluate and prepare appropriate contingencies for your particular project conditions and risk exposure.
