Market Report 3Q/4Q 2022
Italy
Gross domestic product
Italy’s gross domestic product has continued to grow, although a slowdown was detected at the end of the third quarter. Inflation maintained an upward trend and even experienced a jump from 8.9% in September to 11.8% in October. In November, the Organisation for Economic Co-operation and Development increased its previous inflation forecast for Italy to 6.53% in 2023.
The European Central Bank (ECB) met in November to co-ordinate member state fiscal policies with those of the ECB. The energy crisis was a central theme recommending support be provided with a cap, with energy consumed beyond that limit to be charged at regular rates.
Italy elected a new prime minister in October, Giorgia Meloni, who presented her government’s budget proposal in November, including measures to ease electricity and gas bills. Final approval is scheduled for the end of this year.
Construction materials
In general, most industrial producer prices have seen a rise since 2Q 2022, especially in electrical distribution items. In keeping with other European countries, steel tubes experienced reduced prices (12%) while structural metal products remained the same.
Industrial producers and consumers are anxiously awaiting cost savings mechanisms proposed by the new government for early 2023.
Market outlook
On average, the construction confidence indicator remains higher than that in 2021 despite ongoing price volatility, supply uncertainty and other challenges. Although there is some slowing in the private sector, contractors look towards the approved NextGeneration EU recovery plan and the funds distribution proposal finalised in June of 2021.
The Italian plan sets out six missions, five of which will require investment in construction through to 2026, including providing digital connectivity throughout the country and improving green efficiency across 20 million square metres of private and public buildings. Also on the agenda is digitising 100,000 classrooms, updating and improving railways, building 381 hospitals and more than 1,000 community homes.
Not all EU member states chose to invest so heavily in digital initiatives as Italy has. Gleeds EMEA Mission Critical is prepared to address the obvious need for increased data centre construction in the short term with our growing local and international team.
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.
