The Economy Mirrors the Construction Sector

Emily Holbrook


March 1, 2012

Some say the state of the construction sector closely reflects global, regional and national economic trends. It seems that theory can be proven true if you look at Ireland, Spain, Greece and Central Europe, areas experiencing severe economic stress.

According to credit insurer Coface, these are the locations that also have been most affected by significant excesses in construction pricing and supply, along with a large number of payment incidents. On the other hand, the economic situations of Germany, Austria, Norway, Sweden, Finland and Poland have fared better, thanks in part to strict austerity measures, and therefore have not experienced harsh side effects within the construction industry.

As for the United States, "falling prices combined with rising costs have weakened the entire construction sector," according to Coface. Non-residential construction also continues to suffer due to state and municipal budget difficulties.

In Canada, however, construction industry recovery that began in early 2010 has resulted in a low occurrence of payment incidents. But it is not all good news for Canada. A sharp slowdown is expected in the housing segment this year, following the introduction of more stringent credit access conditions. In regards to the Asia-Pacific zone, post-catastrophe demand has kept the construction industry stable.
Emily Holbrook is the founder of Red Label Writing, LLC, a writing, editing and content strategy firm catering to insurance and risk management businesses and publications, and a former editor of Risk Management.

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