Czech construction industry posts growth after seven years of falling output

The Czech Construction industry is showing signs of recovery after seven years of falling output. This year’s predicted one percent growth copies a similar trend across Europe. According to Euroconstruct’s forecast for 2015-2017 the lean years for Europe’ construction industry are definitely over.

Photo: Kristýna Maková

As late as mid-2014 Euroconstruct, a network of 19 European Research Institutes, had a gloomy forecast for the Czech construction sector predicting a fall of 3.8 percent. Now it has revised that forecast to a one percent growth. Its forecast for the next two years is equally encouraging with a predicted 2.5 percent growth in 2015 and an average 4 percent growth in 2017.

The recovery copies a similar trend around Europe where the 19 countries represented in Euroconstruct saw falling output of 2.7 percent in 2013 and are expected to see an average one percent growth this year. According to Euroconstruct’s forecast housing construction should be the driving force behind the sector’s gradual recovery with an average annual four percent growth predicted until 2017, engineering construction should grow by an average 2.5 percent in the same period and renovation should also contribute to the positive trend. It is Eastern Europe which is currently the driving force behind the recovery with an average growth forecast of 4.8 percent for this year and over 5 percent in the years to come. This is largely to due to EU financed infrastructure projects such as roads and highways.

According to a poll conducted by CEEC Research among 100 Czech Construction companies the industry has suffered due to the generally low cost of commissions and frequent problems in securing approval and finances for new infrastructure projects. Other complaints include an excessive bureaucratic burden and complicated legislation.

New commissions have been coming in for rail construction and water-management facilities, but road and highway projects have been fraught with complications. According to the CEEC Research survey many construction companies accepted disadvantageous commissions during the crisis in order to say afloat or not have to lay off employees and these are now hurting their cash flow. The Ministry of Trade and Industry has promised to work on alleviating the bureaucratic burden and speeding up construction permits. It also sees considerable potential in a more effective use of EU funds.