The main near-term risks to the economic outlook revolve around whether or not the:
- Delta variant will result in COVID infections that overwhelm health systems and require a return to lockdowns.
- Current uptick in inflation will persist, necessitating a premature tightening of monetary policy.
Supply-chain bottlenecks have caused significant shortages of construction materials in key construction markets. This has caused price rises in key materials such as lumber in some markets where shortages have been acute. We do not expect this to last beyond the short-term recovery from the pandemic.
Looking longer-term, economic risks also relate to governments’ ability to manage debt levels in the context of increasing demands on public spending brought about by demographic shifts.
Climate change is arguably the biggest risk facing the construction industry over the longer term and the need for the industry to reduce embedded carbon in infrastructure and buildings is already a key issue.
