International construction market survey 2016
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Global economic<br />
overview<br />
The global economy has suffered a turbulent year defined by the ripple effect of China’s slowdown<br />
and the bursting of the oil price bubble amid a general decline in commodity prices. Monetary<br />
policies, politics and currency rates have also impacted on global economic growth in both<br />
overstretched and over-reliant <strong>market</strong>s.<br />
Global picture<br />
3.1%<br />
global growth in 2015<br />
3.4%<br />
projected global growth for <strong>2016</strong><br />
3.6%<br />
projected global growth for 2017<br />
Changing China<br />
6.9%<br />
China growth in 2015<br />
6.3%<br />
projected China growth for <strong>2016</strong><br />
6.0%<br />
projected China growth for 2017<br />
The IMF’s latest forecasts show the global rate of economic<br />
growth is expected to increase. Current forecasts are<br />
however 0.1-0.2 percent lower than previous forecasts as<br />
several emerging issues are set to challenge growth trends.<br />
The once predominantly manufacturing-led Chinese<br />
economy is becoming increasingly based on services<br />
and domestic consumption. This is causing the slowdown<br />
in national economic growth that has been widely<br />
considered inevitable for some time. Annual growth<br />
rates of up to 15 percent reflect a time when the Chinese<br />
economy was a lot smaller than it is today and were<br />
far from sustainable over the long term. More modest<br />
growth is expected over the coming years.<br />
Chinese exports are down and the flow of raw commodities<br />
into China is slowing – both issues to which economies<br />
with strong trade links to China will need to respond.<br />
The dominant trend impacting confidence in worldwide<br />
economic growth is the global decline in commodity<br />
prices. Falling coal and oil prices have already begun<br />
to squeeze key exporting countries and regions such as<br />
Brazil, Australia and the Middle East. Falling coal demand<br />
is complicated by the trend towards alternative energy<br />
resources motivated by increased environmental<br />
awareness. While demand for oil has similarly dropped<br />
– with China playing a key role – falling prices have been<br />
exacerbated by a supply glut as the Organization of the<br />
Petroleum Exporting Countries (OPEC) attempts to drive<br />
the USA shale industry into unprofitability.<br />
An effect of the resources downturn on the <strong>construction</strong><br />
industry has been the fall in the prices of key building<br />
materials such as steel, which is lowering <strong>construction</strong><br />
costs in many <strong>market</strong>s.<br />
6<br />
Turner & Townsend
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