The Future of Construction

The construction industry has demonstrated remarkable resilience during the worst of the coronavirus pandemic and over a period of significant disruption to the global economy – the worst since the Great Depression some 80 years ago.

Although the near-term outlook for the global economy remains clouded by a surge in inflation and supply-chain bottlenecks and the Delta variant remains a threat – as Oxford Economics forecasts in this newly published global forecast Future of Construction – the global construction industry is set to lead global economic recovery from the pandemic over the medium-term and is expected to grow faster than the manufacturing or service sectors.

The global construction market is expected to grow by US$4.5 trillion over the decade to 2030 to reach US$15.2 trillion. Just four countries – China, India, US and Indonesia – will account for almost 60% of this growth while the top 10 global construction markets are expected to account for almost 70% of the growth over the same period.

REPORT

Future of construction

A Global Forecast for Construction to 2030

A proportion of the huge build-up in excess household savings across the developed world – equivalent to over 10% of GDP in North America – is expected to be unleashed by consumers and will drive economies to support heightened growth across the residential construction market.

A further wave of increased demand for construction will derive from accelerated infrastructure investment supported by large stimulus programmes aimed at boosting economies. The American Jobs Plan and Next Generation EU fund are examples. The US Infrastructure Bill represents US$550 billion in new spending on infrastructure and is part of a US$1.2 trillion package of infrastructure announced by President Biden to boost construction.

As this report makes clear – climate change and the risks and opportunities this presents for the construction industry is the biggest challenge the industry faces. ESG and green financing will drive a greener recovery from the pandemic. This report also highlights that the emergence of a deconstruction industry that will reuse existing built assets as well as tools that will help disclosure of the carbon footprint for any new asset ahead of physical construction will become the new norm.

There are huge opportunities and risk factors for the construction industry from climate resilience driven by natural catastrophes.

The common themes that arise from this report – including key observations from construction firms operating in global markets – is changing risk and the opportunities shaping the Future of Construction.

It is therefore essential that the construction industry and insurance marketplace work closely together to ensure changing risk profiles are managed across stakeholders and to promote continued innovation that will benefit to society.

Marsh and Guy Carpenter are delighted to have worked with Oxford Economics to provide insight into the opportunities and developments expected within the construction industry globally in the coming years. It will undoubtedly be an exciting period of challenge, but one we should look forward to, as the construction and (re)insurance industries continue to play a vital role in the economic development and future prosperity of the world economy, and in helping to improve the global environment.

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Richard Gurney

Global Head of Construction, Marsh Specialty

  • United Kingdom

REPORT

Future of construction

A Global Forecast for Construction to 2030

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